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

To: Think4Yourself who wrote (105216)	7/17/2008 5:23:24 PM
From: Dennis Roth	Read Replies (1) \| Respond to of 206184

Yup, if you've been following the reports, production in the lower 48 keeps rising month after month. All that drilling is producing results. Yes, LNG imports and imports from Canada are down, but maybe we don't need it in the face of rising domestic production. A lot of the drilling has been in shale that requires long horizontal bores and fracturing that take longer to bring into production, coal bed wells require a long period of water pump out before they begin producing. So the production response to higher prices has taken longer this cycle, but production is rising. The cure for high prices REALLY is high prices. I think we would have seen a break in NG prices sooner if oil prices hadn't been dragging gas up with it and Independence Hub hadn't had such a prolonged unplanned outage. Only a cat 5 hurricane can save NG from a slump now, IMO.

To: Think4Yourself who wrote (105216)	7/17/2008 6:43:58 PM
From: Dennis Roth	Read Replies (1) \| Respond to of 206184

Constraints, basis disruptions may emerge from gas surplus: study Knoxville, Tennessee (Platts)--17Jul2008 platts.com Excess natural gas supply that could build as early as 2010 in the Southeast and Gulf Coast regions of the US may cause pipeline constraints and basis disruptions because capacity is not keeping up with burgeoning output from the region's shale plays, said a Bentek Energy study released Thursday. Higher gas prices, favorable market conditions, significant cash flow and investment capital are spurring an unprecedented increase in natural gas production activity in the unconventional Barnett and Deep Bossier shales in Texas, the Woodford Shale in Oklahoma and Arkansas' Fayetteville Shale, the report noted. "This regional supply surplus will create market imbalances with implications for other regions, shifting flow patterns and creating price differential disruptions in the backyard of Henry Hub in Louisiana," the Evergreen, Colorado-based firm noted. "We anticipate an increase of 11.3 Bcf/d of additional wet gas production and 9.4 Bcf/d of dry gas production flowing into the Southeast/Gulf between January 2008 and December 2012," noted Russell "Rusty" Braziel, Bentek's managing director. "Over the next five years, we expect new gas-fired power generation facilities, industrial load and some residential/commercial demand to drive a modest annual 1.5% demand growth from Texas to Virginia. However, this demand growth is seriously outstripped by the 6.9% average annual supply growing projected in the Southeast/Gulf during the same period," Braziel added. The consequence is that pipeline capacity out of the Southeast/Gulf region will fill in less than two years, Bentek said. Outbound pipeline capacity usage is projected to be at 100% by the winter of 2009-2010, while demand for capacity will be more than 2.5 Bcf/d greater than the space available on both current and planned pipelines. While new pipeline expansions will help alleviate the gap in 2011-2012, it won't be enough to eliminate the excess supply, the consultant noted. "This surplus will have to go somewhere," Braziel said, suggesting that gas traditionally flowing from the Midcontinent and West Texas markets into the Southeast will be displaced into lower-value markets in the western US. Then, pipeline corridors to the US Midwest and Ohio Valley will fill with Southeast/Gulf supply and thus displace Canadian imports, which likely will aggravate the gas-on-gas competition between Southeast and Rockies producers as well, he noted. "The unmistakable conclusion is that more outbound pipeline capacity infrastructure and debottlenecking projects are needed sooner rather than later to be able to move increasing supplies out of the region into higher demand markets than can absorb the increased gas flow," Braziel said. The report is part three of Bentek's "I of the Storm" market report, evaluating gas markets nationwide as more than 75 new gas pipeline, storage and liquefied natural gas terminal projects come online in the Southeast between now and 2012. --Stephanie Seay, stephanie_seay@platts.com