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

To: tommycanuck who wrote (17825)	2/4/2003 5:02:09 PM
From: Sweet Ol	Read Replies (1) \| Respond to of 206184

All my E&P's finished up today, most of them strongly up. The lonesome exception is EPL. The only one of my NGRT's that is down is WTU. What a great day!!! Best to all, JRH

To: tommycanuck who wrote (17825)	2/4/2003 5:03:53 PM
From: GREENLAW4-7	Respond to of 206184

Tommy, incredible insight!! Thanks

To: tommycanuck who wrote (17825)	2/4/2003 5:16:04 PM
From: kollmhn	Read Replies (1) \| Respond to of 206184

tommy- Along the lines of your concerns is this piece from MS: Here's MS' version of the story: Supply Fundamentals Supportive Quarter-to-date results from our North American natural gas survey show a continuation of the difficult production trend of the past several quarters, and continue to lend support to the structural argument for natural gas. 53% of our sample group (50% volume-weighted) has reported, with results showing North American natural gas production having declined 2.9% sequentially and 8.4% year/year (Exhibit 10). Our expectations for the comparable group were for declines of 1.9% and 7.5%, respectively. Results have been adjusted for acquisitions and/or divestitures, where applicable. While the entire industry faces an accelerating decline curve, our survey results point to an especially difficult domestic upstream environment for the Integrateds (Exhibit 8). This ties into Doug Terreson's (Morgan Stanley Integrated Oils Analyst) view that additional divestitures of non-core properties during the upcoming quarters are likely. As a result, independent E&Ps best positioned given their financial capacity will likely assume their familiar role of buyer. Case in point - Apache's recent acquisition of assets from BP. Focus Now on Demand The current high price environment is doing damage to gas consumers, in our view, and we expect signs of demand destruction to emerge in the coming months, though we have still not seen any material destruction to-date. But once again, we had high bid week pricing, and natural gas prices today are sufficient to support ~2-3 Bc/d of demand erosion, in our view. As such, we question whether destruction is being disguised, especially given industrial hedging ahead of the winter and the non-linear demand pattern from extreme weather. Absent a demand response, we project end of winter storage between 700-800 Bcf (Exhibit 9), well below the norm of 1,050-1,100 Bcf.

To: tommycanuck who wrote (17825)	2/4/2003 7:45:48 PM
From: t4texas	Read Replies (1) \| Respond to of 206184

i am no lng expert, but i have been told by ng people who have the knowledge that lng is not economical below $5. i have never seen a breakdown of the operating costs or the investment costs for lng either. i am just passing the info along.

To: tommycanuck who wrote (17825)	2/4/2003 8:06:33 PM
From: Frank	Read Replies (1) \| Respond to of 206184

Ah, Tommy trust an old hand like you to raise the specter of reality. Good points all and I hope we are taking them into account. My thinking (from a far lower level of experience) goes something like this: (1)Theoretically, the new NG plants have more thermal efficiency than the older ones but there is evidence this may not be so clear in practice. Research has suggested that because the new NG units are used as peakers their actual performance is significantly below nameplate. (2) The extent of fuel switching is a matter of debate. Perhaps there is still 2.5 per day available--perhaps not. Nuclear and coal pretty well maxed out--hydro dropping. Oil works in East but not in midwest or other regions. As plants are retired the fuel switching degrees of freedom become less and less. (3) NG turbines have been cancelled no question. But we still added 55 GW of NG in 2000 and 2001 plus 2002 and plants which will certainly be built in 2003--another 50 or so? (4) Do we have data on how many fertilizer and ammonia producers are already out of the picture? Certainly some since otherwise the situation would be a disaster. (5) LNG may or may not be at 6 bcf by 2006 but my guess is not. Siting those facilities no easy task. And, at anyrate I believe we can't wait til 2006 to solve problem. I also note three relatively undeniable issues (a) As Mark Papa said today we are producing only 48 bcf as opposed to 62 in 2001. (b) Canada is not the calvary any longer and they have their own supply problems. (c) There have been millions (billions?) of square feet of NG heated space added to the residential and commercial sectors in the last decade. We have no metric for what these additions mean since winters have been warm. I believe this is why Lehman consistently underestimates the draw --their model is dated. Having said all this, I am looking at things with the same skepticism you show--I got my butt kicked as well. I appreciate your thoughts as you have been there for decades and I am a wannabe. But I hope we both make money--your old buddy--Frank