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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: BirdDog who wrote (6630)	1/21/2002 3:26:48 AM
From: nspolar	Respond to of 36161

Russ, BirdDog ... <Because after running the fleet so hard for the past two years, a significant amount of generation is slated to come off line in 2002 for repairs and refueling.> This alone tells me the guy doesn't know in total what he is talking about. Sounds common sensical, but the reality is this is a euphemism that has no direct correlation to the life of industrial power generation equipment, in general. Most of these plants will put out more than rated, and be very happy to do so, without any extra wear and tear on the equipment. They will be able to do this day after day (with normal maintenance) for years and years. There are some good maintenance and reliability engineers around these days. The companies that have these engineers, and use them properly, get a lot more out of their equipment than they originally speculated. Why? Design improvements are continually implemented, improving reliability, output, and efficiency. To wit just look at refinery utilization rates today, versus those of 20 yrs ago. A large improvement was made. Additionally I'm sure nuclear power plant operators look well ahead, and take plants down for maintenance when it is best to do so, from a revenue/expense perspective. They would look at present rates, future rates and all that stuff. These people aren't brainless, in particular when large amounts of coin are at stake. Significant coin is at stake with a nuclear plant, due to large outputs. Why would several of these plants be timed to come down at the same time. Stroke of luck? Simmons, some time ago, attributed the weak NG draws to a fall-off in 'industrial' demand. We can discuss the details until hell freezes over, but the primary point(s) of Russ's argument hold. Fluctuations in power demand will part in partial be met by NG (plus liquid fuels). You don't put a nuke plant online overnight, nor a coal burner. Likewise, gas supply will taper off, due to a lack of drilling. Thus one should be able to make some coin by timing and investing in these swings. I'm watching NG here myself. The last huge swing up in spot prices of NG were in my opinion attributable to a coincidence of events, that I doubt we'll see again tomorrow. The primary events were a shortage in power, and supply tightness in both NG and liquid fuels. The only way to quickly (relative speaking compared to 10/20 yrs ago) bring on large volumes of new power is via installation of gas turbines, liquid or gas fired. So when you get shortages in all three commodities at the same time, it makes for powerful clam chowder. Right now it doesn't appear we're going to have power shortages again anytime soon, or tightness in supply of liquid fuels. So for the near term I would expect pops in the price of NG and related stocks to be limited. If I buy in here soon, my plan will be to play em. FWIW.