Replies to post #295 on The Rising Influence of Rising Affluence

[OakesCS]

Nat Gas Sutherlin comments

other factor for natural gas is that the depletion rates on the natural gas wells, particularly the new Shale plays that the depletion rates are dramatically fast. 18 months is a typical average Shale. And the drilling part of it – I still have a connection to the oil and gas drilling business in one of the boards I am on and in that industry, it still is a rule of thumb that no one is starting drilling programs with natural gas prices below $7.

everything i've quoted above is either flat out wrong or very misleading. Probably why Tesco is only a $300M O&G service company (when most are multi-billion $ companies).

http://www.slb.com/media/services/solutions/reservoir/shale_gas.pdf

[CT]

No matter what GS thinks, I believe that NG is low enough to begin to scale in over the next few months. The difficult part for the average investor is finding an appropriate vehicle. NG equities have dramatically outperformed NG itself over the last few months, and many people don't have a futures trading account. Then there's UNG which I won't touch with a 10ft pole. That premium is unsustainable and will disappear for one of two reasons.

The ideal NG investment right now would be an ETF akin to GLD, where NG is put in storage. I'm going to look at some companies specifically in the NG arena (little to no oil expl) and find the ones with the lowest mkt cap to proven worldwide reserves ratio. That's about the best I can do right now.

[DewDiligence]

Following up on Sutherlin’s comments from the JOYG CC, it’s important to note that NG demand by electric utilities is non-linear with respect to the demand for electricity. The reason is that NG is used as a standby fuel by many coal-fired plants operated by electric utilities.

In other words, a hypothetical 10% increase in the production of electricity (from an improving economy) would in all likelihood lead to a more than 10% increase in the use of NG by electric utilities.