The Rising Influence of Rising Affluence

[wow_happens28]

Old Fool responds to the NG article, Old Fool has been around this for most of his adult life, I'm not wild about UNG, but maybe I'll watch it for the turn as he suggests>>>

It is my opinion that it is way too early to jump into natural gas. The market is awash in supply and the price is down to about $3.15/million Btu. Pull up a chart of UNG if you want to see the bad news. Now, this situation will likely exist for another 6-12 months - depending on when utilities need to start locking in prices for the future. Just keep an eye on that UNG chart - it will tell you what you need to know. It is on my watch list.

Understand, that the new EPA rule takes 3 years to fully kick in - so those old coal units have some time left. It will vary - some utilities have low load factors now because of the bad economy and may choose to shut down units early. Others will wait until the last minute. I talk to a lot of those guys and see no consistent plan. Two things are certain - lots of old coal units will be shutting down and electricity prices will slowly climb about 30% higher. Gas is the only available fuel for the future (nuclear is dead again) so prices have to go up sooner or later. I just don't know when - watch the UNG chart is my best advice.

And a different poster chimed in, don't know his credentials, but sounds good>>>

Kids in a Candy Store
Many years ago I attended Enercom and heard Aubrey speak, he stated flat out that Chesapeake had won the great land rush. The way he spoke it was all over, Chesapeake had leased all the great plays. Since that time we have seen one shale play after another open up.

As a result of this no company wants to be left out. Each play is hyped to be better than the last. So the companies all rush in and lease as much as they can. Well after they lease these acres, in order to maintain their leases they have to drill.

This is why posters predicting a ngas washout for the last several years have been wrong. I think it is not pricing which has been driving ngas drilling, but the desire to not be left out. The desire to stuff their pockets with candy, when a new candy store opens.

Once they pay all this money for acreage, they have to justify the purchases and they have to drill baby drill. We now have the Marcellus and Utica, drilling in this area will pick up the slack as drilling slows down in plays like the Haynesville.

The idea that these new plays are rich in liquids and are not a ngas play is misleading. They still produce a hell of a lot of ngas. To get the liquids they will produce the ngas. So ngas remains in the shitter.

Wilk



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