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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Second_Titan who wrote (4833)	10/28/2001 1:54:01 PM
From: schrodingers_cat	Read Replies (1) \| Respond to of 206085

Very bullish Raymond James report: raymondjames.com -Weather adjusted, there is 3-4 bcf/day less gas available for storage than last year. OK, this all looks very bullish for the drillers, however: 1/ Is it possible that the producers anticipated a surplus of gas in Oct. and that they have delayed bringing their wells into production? Perhaps they looked at the futures prices and decided to sell the gas forward instead of producing it right away? 2/ Does the lack of production growth indicate a shortage of good quality prospects for natural gas companies to drill? Will this hold back demand for drilling rigs in future? 3/ High prices cure high prices, and with NG back above $3, this will drive fuel switching to #6 oil and may force fertilizer plants to shut down again. I would prefer to see NG below $3 until storage is drained or the economy recovers.

To: Second_Titan who wrote (4833)	10/28/2001 2:05:42 PM
From: Tommaso	Read Replies (2) \| Respond to of 206085

All the mid-to-small Canadian producers that I follow seem to be adding gas-producing capacity, but I don't have a source that gathers all that information in one place. Jim_p has documented this much more carefully than I can, but there are a great many small producers (US and well as Canadian) who increased their gas production by very large percentages, and in aggregate this extra gas was enough to bring the price down from $10 almost to $2. Also, of course, there were the conversions to heavy heating oil and the shut-downs of fertilizer plants, and so on. I don't know exactly how fast the new NG generating plants are coming on line, but with the relaxation of economy measures because of lowered prices, plus the rapid layoof in drill rigs, I expect a bullish figure for NG storage this week and a fairly rapid draw-down of the storage. My point is that guesses made on the basis of what the largest companies are producing are taking into account these other factors. I think there is a great deal of gas waiting to comeback into the system from smaller producers, and a lot of that from Canada, just as soon as the price edges back up towards $5. The prospects for natural gas look very good, but I think last year's spike was a fluke, and I do not think that the production decline of the majors will send prices up like that again.