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

To: Ed Ajootian who wrote (16237)	12/28/2002 1:05:19 PM
From: quehubo	Read Replies (1) \| Respond to of 206326

Ed - One of the things I have to work on is to get a good feel for what drilling activity will be in 2003 and 2004. But assume 2003 will average 150 more rigs than 2002 and 2004 will average another 150 or so. I have seen analyses that with growth like this in 2003 and 2004 production may be just getting back to peak levels achieved in 2001 in late 2004. A factor that should not be ignored is that the so called glut of 2001/2002 was really the warmest Winter in 100 years. I need to review some reports on this one. But the general point is that average drilling activity is in real incline with higher highs and higher lows. Also even with an explosion in activity most are projecting a 2% decline in production in NA NG in 2003. My bet is the NA NG supply issue is a very big problem that will be forefront in our energy issues for the next 3-5 years, or until we get a pipeline from Alaska. In late 2004 we may find a good equilibrium in supply demand with a higher price and lower supply. But the activity levels to maintain that will be very high Q1 2003 will be very bullish for NA NG, Q4 2003 will be scary for consumers as we will be entering the heating season with record low storage levels and production levels. If someone can counter why this wont happen let me know. A warmer Q1 2003 than Q1 2002? Not likely to happen and the impact would be marginal. Demand destruction? Most of the easy demand is long gone. Fuel switching? It will be necessary just to ensure NG is available for consumers who have no other option. Energy prices will be a big drag on the economy in 2003. In order to meet demand, switching to residual and mostly #2 oil will be required. This will be a big drag on business.