Commodity Price

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    EIA Says Marcellus Prices Often Swing $1 Mcf Below Henry Hub

    An article published by the U.S. Energy Information Administration (EIA) on their online Today in Energy publication from yesterday highlights the ongoing struggle for prices in the Marcellus Shale region to keep pace with the benchmark Henry Hub in southern Louisiana. As MDN pointed out just a few weeks ago, it’s not inconceivable that a delivery point in the Marcellus will one day replace the venerated Henry Hub as the new benchmark price (see Will ‘Dominion South’ Replace ‘Henry Hub’ for Natgas Pricing?). The EIA story points out an obvious truth that bears repeating: When you have more production than you have in pipeline capacity to get that production to markets that want it–you get a surplus of supply and much lower prices. Sometimes those prices can, on a dime, swing to a dollar or more lower than the Henry Hub price…
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    Will ‘Dominion South’ Replace ‘Henry Hub’ for Natgas Pricing?

    From time to time MDN will cover stories about the price of natural gas because price determines whether or not drillers will bother to sink holes in the ground to extract natgas. One area we’ve not delved into a great deal is the trading of natural gas. We prefer to point you to top notch publications like NGI’s Daily Gas Price Index for stories about the price of natgas. However, there is a story out today from Reuters that talks about a possible change coming in how the price of natgas gets quoted. A really big change…
    Read More “Will ‘Dominion South’ Replace ‘Henry Hub’ for Natgas Pricing?”

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    Marcellus/Utica 3-Month Weather Forecast: Cool, Warm, Warm

    Because the weather has a great deal to do with the price of natural gas, and the price of natural gas has a great deal to do with whether or not drillers are willing to drill for it, MDN brought you the Weather Services International long range forecast one month ago (see Global Warming, Global Cooling & Natgas Prices). WSI is back with an updated long range (next three months) forecast. What does it show?…
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    KPMG Survey: 3/4 Energy Execs Say US Energy Independent in 15 Yrs

    Each year powerhouse tax and auditing firm KPMG conducts a survey of U.S. energy executives. The 2014 edition of KPMG’s Energy Industry Outlook Survey (full copy below) is in and it shows that because of shale and new energy infrastructure, 73% of energy executives believe the U.S. can attain energy independence by 2030, or sooner. That’s up 10 percentage points from KPMG’s 2013 survey. Some 37% said the single most important energy-related priority should be new pipelines and electric transmission lines…
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    Best Minds Say Natgas Price to Remain Under $6 for Next 20 Yrs

    According to analysts at Goldman Sachs, the days of futures traders running up the price of natural gas are long gone. Goldman says U.S. shale production will “constrain” natural gas prices for at least the next 20 years–if not longer. And it’s not only Goldman making that prediction…
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    Global Warming, Global Cooling & Natgas Prices

    MDN is not a fan of the “man causes global warming by burning fossil fuel” theories that are all the rage these days. The problem, you see, is lack of, well, global warming! No evidence. Take, for example, last winter. Please don’t insult our intelligence by telling us that brutally cold temperatures (the coldest in a generation) are also the result of so-called “global warming.” You don’t get to say that warming also causes cooling–that’s not part of the theory, a theory that says too much carbon in the atmosphere causes temperatures to RISE, not FALL. You don’t get to make up the science as you go to fit your cockeyed beliefs. A flawed theory is a flawed theory. So when we spotted the following summer forecast from Weather Services International, along with their map (below), you’ll understand why we continue to be “warming deniers” and “climate skeptics.” And what does this have to do with Marcellus drilling? A lot, as it turns out…
    Read More “Global Warming, Global Cooling & Natgas Prices”

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    NGSA Predicts Summer Natgas Prices Will Rise

    The Natural Gas Supply Association (NGSA) is fresh out with their own prediction for where the price of natural gas may be heading in the near-term–meaning this summer. According to a press release and PowerPoint presentation (both embedded below), the NGSA says natgas prices will be slightly higher this summer compared to last summer, mainly due to the brutal winter and drawdown in stored supplies. Those low storage volumes mean producers have to fill them back up and that will lead to a bit more demand and in an almost pure commodity market like natural gas, more demand matched to the same or slightly more supplies means prices will go up. Here’s what the NGSA says…
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    Platts Launches New Daily Price Assessments for Shale Value Chain

    On Tuesday, Platts announced six new “daily price assessments” for the shale “value chain.” These are price indices–price calculations of various kinds (think the Dow Jones Industrial Average) that can be used to better understand what factors are driving the shale market up or down. Who will use these new indices and why?…
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    UGI Natgas Price Increase for 2 Regions, Decrease in 3rd Region

    Record-breaking low winter temperatures drew down inventories of natural gas in the northeast this past winter. The natural gas utility that serves some of the largest markets in PA, including northeast PA and southeast PA, is UGI. They announced yesterday that due to the supply/demand issues from winter, they will need to boost the price of natgas to their customers in the Scranton/Wilkes-Barre area by 5.7% come June 1st. UGI is also boosting rates for their customers in southeast PA (greater Philadelphia area) by 4% on June 1st. However, UGI’s third natgas service area–in central PA–will not change on June 1st and will actually go down on December 1st by 2.3%. Why is the price going up in two regions but down in the third?…
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    EIA Releases Annual Energy Outlook – Gives Us the Big Picture

    The U.S. Energy Information Administration (EIA) has just released their Annual Energy Outlook 2014 (full copy embedded below). Each year the EIA performs a comprehensive review of all sources of energy used in the U.S., and they take their best guess at where supply and demand–and prices–will go in the near- and long-term (to 2040 for this report). The EIA employs some of the best brains in the business and of all the government agencies, the EIA is least susceptible to political manipulation by The White House. We love the EIA and the reports and information they generate.

    When MDN editor Jim Willis attended the Platts Global Energy Forum last December, it was a real eye-opener (see Jimmy Goes to the Big Apple: Platts Global Energy Outlook Forum). Those of us heavily involved in the shale industry sometimes lose sight of the bigger picture. Shale energy is just one component–a very important component, but just one–in a much larger energy picture. This annual report from the EIA helps provide that larger perspective–helping us to see where the shale energy industry “fits” in the picture. One tidbit from the report we noticed was their prediction for where the commodity price of natural gas will go in the near- and long-term. The EIA says…
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    Peak Oil/Gas Theorist Art Berman Generates “Study” for NY Ladies

    A month ago the New York League of [Liberal Democrat Anti-Drilling] Women Voters hired a consultant that has been so wrong about his theories on “peak oil” he would be laughed out of any room he walks into (see Peak Oil Theorist Art Berman Says Shale Gas is Peaking Too), to pen a new report that says just want the lib ladies want it to say: If drilling were to begin in NY today, nobody would drill here because they couldn’t make money by selling gas at $4-$4.50 per thousand cubic feet.

    To which we say–fine. Let’s find out! Cabot Oil & Gas is making money hand over fist in Susquehanna County, PA, just across the border, even with gas as low as $1.50 per Mcf. Let’s see if they can work some of that magic on this side of the border. But of course that’s not what this so-called “study” is about. The study ordered up by the very anti-drilling so-called League of Women Voters is a further attempt to dispirit New Yorkers on shale drilling. For Art Berman, the purpose of the study is to repair his damaged reputation. It does the opposite, providing the final nails. Below we have the press release announcing this latest laughingstock of a “study” from the discredited Art Berman, along with a copy of the 44-page “study” itself…
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    Chicken/Egg Problem of Getting Cheap Marcellus Gas to NE Markets

    One of the big stories over the winter months was the spike in price for natural gas around places like Boston and New York City (see The Wild Ride for NatGas Prices in the Northeast). At one point the price of natural gas sold near Boston briefly rocketed to over $120 per thousand cubic feet (Mcf). The price for the Algonquin Citygate (Boston) normally runs from $4-$11 or so. No problem. We live in a (somewhat) free, capitalistic economy, right? If there’s demand like that in the northeast, and there’s all this supply from the Marcellus right on the doorstep of these markets, it’s Marcellus to the rescue, right? Wrong.

    Drillers certainly would love to supply more natural gas to the northeast, but lack of pipelines stands in the way. Complicating matters–a lot of the demand in the northeast comes from electric generating plants, and their demand fluctuates throughout the year based on electric loads. Because of strict regulations, electric plants won’t lock themselves into long-term contracts that may result in a higher prices because they would not be able to pass on the higher prices to consumers. It’s a quick way to go bankrupt. Pipeline companies will not build the new pipelines needed to get the gas from the Marcellus to northeast markets without long-term commitments. Electric generating plants won’t commit long-term. Chicken and egg…
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    Shale Plays Now Majority of Revenue for Oilfield Services Cos

    Each year UHY LLP Certified Public Accountants and PennWell Publishing’s Oil & Gas Financial Journal conduct a survey of the oil and gas industry and publish the results. In a press release about the latest survey we learn some interesting facts: More than half of oilfield services companies and some 40% of drillers (E&P companies) say that shale plays will be responsible for more than half of their revenues in 2014; most companies surveyed believe the commodity price of natural gas will remain at the $4-$6 level through the end of 2015; and 75% of those surveyed use pipelines to get their product to market, as opposed to tanker trucks and railroads.

    Here’s the full press release with some more tidbits from the survey, along with instructions for how to get a copy of the survey…
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    RI Politicians Cry to Energy Sec. Moniz About High NatGas Prices

    Free enterprise. Capitalism. Freedom. Works every time and in every place that it’s tried. And it works better than any of the alternatives. The opposite is government regulation, restriction, less freedom–and when that’s tried, in places like Rhode Island–you get less of things and higher prices. Which is why Rhode Island officials were crying to Energy Sec. Ernest “Hair” Moniz yesterday. They want relief from high natural gas prices and they (predictably) want “the government” to fix it.

    What if, instead, Rhode Island and Massachusetts and other New England states, instead of banning fracking (see Vermont Becomes First State to Ban Fracking) tried capitalism, free enterprise and less government regulation? Hey, there’s a radical idea! Run some more pipelines and start fracking and you’ll see natgas prices drop in New England as it has in other areas. But a dose of common sense is simply a bridge too far for places like Rhode Island…
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    Moody’s Says Marcellus is Different–and Better–than Other Plays

    Moody’s Investors Service has just published a new 11-page (5,231 word) report titled, “US Exploration and Production: Marcellus’ Natural Gas Bounty Rewards Early Adopters.” Pricetag? $550 smackeroos. A bit too pricey for us for an 11-page report! However, Moody’s has kindly shared some of the high-level conclusions they reach in the report, including this one: “Exploration and production (E&P) companies that extract natural gas from the Marcellus Shale play will benefit more than natural gas producers elsewhere in North America, and their advantage isn’t likely to change anytime soon.” We agree.

    The report says early movers like E&P companies including Chesapeake, Southwestern and Anadarko, and midstream companies like MarkWest and Sunoco Logistics, have a distinct and ongoing advantage. Here’s a bit more from their summary of the report in which they point out the Marcellus is not like any other shale play:
    Read More “Moody’s Says Marcellus is Different–and Better–than Other Plays”

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    Yet Another “Shale Gas Will Last Only 10 Years” Claptrap Article

    We spotted a long (and we do mean long) article on the Seeking Alpha investors’ website about the Marcellus Shale. Titled “Marcellus Shale: Through A Glass, Darkly,” the article has lots of charts and graphs, and a lot of math (our eyes glazeth over). We read or scanned through most of it. The author, Moshe Ben-Reuven (a former aerospace engineer, which explains the charts and math and formulas), makes some good points. But when you dig deeper, you understand his overall theme and why he spins the story he does. Ben-Reuven’s theme is that the Marcellus won’t last all that long–10 years IF we don’t export any of it. We can make it last longer if we dump water-based fracking and use alternative (i.e. expensive) fracking methods. And oh yes, shale gas is just a little stepping stone on our way to the alternative energy nirvana future that awaits us all. Shale gas is good for weaning us off nasty coal, but once that’s done, we’ll need to wean ourselves from the less-nasty (but still nasty) shale gas fossil fuel too. That’s the rough conclusion he comes to (see it in his own words below).

    It won’t surprise you to learn that Ben-Reuven heads up a “green energy” company that develops biomass fuels–a technology left behind in the proverbial dust of the shale gas revolution/miracle now taking place. Which explains all of the hocus pocus numbers and story spun by Ben-Reuven. And which brings to mind the old saying: If you can’t dazzle them with brilliance, baffle them with bull…
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