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

To: Dennis Roth who wrote (156973)	9/15/2011 6:27:51 PM
From: Dennis Roth	2 Recommendations Read Replies (1) \| Respond to of 206085

Natural Gas Weekly NGL’s Continue to Provide Strong Uplift for Liquids-Rich Plays 5 September 2011 ¦ 14 pages citigroupgeo.com NGL’s Continue To Provide Uplift For Liquids-Rich Plays — Many prognosticators were bearish with regard to North America NGL prices one year ago, and more specifically on ethane prices, given the wall of supply that was projected to hit the market as producers turned their focus towards liquids-rich plays. However, after hitting a low of $0.45/gallon in July of last year, ethane prices have averaged $0.73/gallon year-to-date in 2011 as demand from the petrochemical industry has and continues to expand. Given that the Rockies remains the swing supply of ethane, and based on our $4.35/MMBtu composite spot natural gas price forecast next year, we project a floor price of $0.51/gallon for ethane although infrastructure constraints will likely continue to keep ethane prices well above this floor through at least 2012. Also, as WTI and Brent oil prices have diverged over the past year, the average NGL-mix barrel has maintained a much closer correlation to Brent prices given that chemical industry demand is predominantly located on the Gulf Coast. Thus, we project that the average NGL-mix barrel will continue to trade at ~52% of the Brent oil price. This means that based on our $4.35/MMBtu natural gas price forecast next year, the average liquids- rich play should receive a nearly $4.15/MMBtu incremental uplift at $110/Bbl Brent and a more than $3.00/MMBtu uplift even if Brent prices were to average $85/Bbl.