Ng glut!!
Re: Ng glut!!
Keep it up Frazer. There are times (maybe plenty) that I don't agree with you.... but I wholeheartedly agree with your comment above that no one needs an echo chamber. I also in agreement with you on the debate on operating cash flow vs actual free cash flow. I truly value Dan's work and all the models... but equally value the insights / inputs from so many of the EPG members here.
Re: Ng glut!!
I sold all my NG stocks several months ago actually shortly after the LNG plant was shutdown. Without this shutdown, the NG in storage would be about at normal levels. I think the time will come in about a year or so, once the new LNG plants come on stream that NG prices will spike. The problem is when to start accumulating NG stocks?
NG is not in a supply glut. Storage levels are only about 10% above normal levels so your statement that There is an NG glut is way out of bounds. If you want to say don't invest in Ng stocks as supply is still higher than demand - fine. but your "the sky is falling" verbage is wrong.
NG is not in a supply glut. Storage levels are only about 10% above normal levels so your statement that There is an NG glut is way out of bounds. If you want to say don't invest in Ng stocks as supply is still higher than demand - fine. but your "the sky is falling" verbage is wrong.
Re: Ng glut!!
Also, you said that NG dropped from $9 to $3 in the past year. Please show me where you got this information. As it is totally incorrect. None of the NG companies had any quarter where they had pricing anywhere near $9. Plus most of the NG companies can make money at $3 NG but you fail to mention that fact.If you don't think investing in NG companies is a bad move, then say so and give real reasons for your opinion..
Re: Ng glut!!
Natural Gas Prices did peak last year to $9.85 on 8/22/22 then freeport and mild winter took prices down below $3.
Last year when Russia invaded the Ukraine, the whole world, particularly Europe, woke up to what they're going to do next,and how on earth is Europe is going to look to displace 17 Bcf a day of Russian gas? The entire market really tightened up, and as we know European gas prices exploded to the upside. I think they eventually hit a hundred dollars in MCF equivalent in prices into Asia as well. What Europe did last year was pretty shocking. They shut at its peak about 15% of the industrial capacity in Germany to try to save energy.
They burnt as much coal as they possibly could get their hands on, which was a full abandonment of 20 years of energy and climate policy. And they were able to stockpile a lot of gas by doing so. Then winter really never came in Europe. It was the warmest winter on record in the last 45 years and here in the US as well. Further, we had a major fire and the Freeport export terminal. As a result, some gas backed up in this the US since it was unable to be exported. As a result, you ended the winter with inventories above average in both Europe and the United States.
And that just took the air out of the gas market. We saw prices here in the US fall from over $9 all the way down to $2 at their lows back in March. And now today they're still trading at $3 in the US and about $15 in Europe & Asia. The US still enjoys this natural gas price that is "70 plus percent below" the world price. And that's always something that has been long-term unsustainable. How on earth can you have such a deep disconnect for US gas prices compared to the rest of the world. And the answer of course is that if you produce gas in the US you can't get that world price.
You can't access the world market because even though the US has gone from being the world's largest LNG importer to the world's largest LNG exporter, we still produce more gas than we can export, and because of that we have a disconnect.
The contention now is that if you were to bring on more LNG export capacity, then you had gas to feed it, that disconnect would close and it could close really, really quickly. By the end of next year, and in the middle part of 2025, you're going to bring on 6 Bcf day of new LNG export capacity. You have 12 Bcf day running now. So that'll be a 50% increase on that.
So the question then becomes, how much gas can you bring online?
Does anyone have any idea how much gas we have brought online in the last 12, 18 months or so?
It's been basically “zero”. The Marcellus has stopped growing and people think it's pipeline constraints, but it’s not - it's geological depletion. The Haynesville is seeing rig counts that are falling cause it's an expensive source of gas (except Comstock is a low cost producer and they are developing a new play in the western area) and the Permian is suffering massive depletion problems. We now have four registered months of month-on-month production declines in the Permian Basin. Something we've never had outside of Covid or the Saudi.
Therefore, we do not have a particularly robust growth supply that we expect to see in the next two years and to get 6 Bcf in the next two years, I mean that would be like the equivalent of going back to the frothiest years of shale growth that we've had - not going to happen.
6 Bcf coming online and a big quesiton of where we're going to get it from. Even if you open up even a little bit of export capacity, you could potentially see a market that pins itself on global prices and go from $3 to $10 very quicky.
How do we have a NG Glut when we were +22.7 above the 5-year average at the beginning of March 2023. Now, 8 months later (during the build season) we are now at +5.7% above the 5-year average with all the so called "record setting" production.
Last year when Russia invaded the Ukraine, the whole world, particularly Europe, woke up to what they're going to do next,and how on earth is Europe is going to look to displace 17 Bcf a day of Russian gas? The entire market really tightened up, and as we know European gas prices exploded to the upside. I think they eventually hit a hundred dollars in MCF equivalent in prices into Asia as well. What Europe did last year was pretty shocking. They shut at its peak about 15% of the industrial capacity in Germany to try to save energy.
They burnt as much coal as they possibly could get their hands on, which was a full abandonment of 20 years of energy and climate policy. And they were able to stockpile a lot of gas by doing so. Then winter really never came in Europe. It was the warmest winter on record in the last 45 years and here in the US as well. Further, we had a major fire and the Freeport export terminal. As a result, some gas backed up in this the US since it was unable to be exported. As a result, you ended the winter with inventories above average in both Europe and the United States.
And that just took the air out of the gas market. We saw prices here in the US fall from over $9 all the way down to $2 at their lows back in March. And now today they're still trading at $3 in the US and about $15 in Europe & Asia. The US still enjoys this natural gas price that is "70 plus percent below" the world price. And that's always something that has been long-term unsustainable. How on earth can you have such a deep disconnect for US gas prices compared to the rest of the world. And the answer of course is that if you produce gas in the US you can't get that world price.
You can't access the world market because even though the US has gone from being the world's largest LNG importer to the world's largest LNG exporter, we still produce more gas than we can export, and because of that we have a disconnect.
The contention now is that if you were to bring on more LNG export capacity, then you had gas to feed it, that disconnect would close and it could close really, really quickly. By the end of next year, and in the middle part of 2025, you're going to bring on 6 Bcf day of new LNG export capacity. You have 12 Bcf day running now. So that'll be a 50% increase on that.
So the question then becomes, how much gas can you bring online?
Does anyone have any idea how much gas we have brought online in the last 12, 18 months or so?
It's been basically “zero”. The Marcellus has stopped growing and people think it's pipeline constraints, but it’s not - it's geological depletion. The Haynesville is seeing rig counts that are falling cause it's an expensive source of gas (except Comstock is a low cost producer and they are developing a new play in the western area) and the Permian is suffering massive depletion problems. We now have four registered months of month-on-month production declines in the Permian Basin. Something we've never had outside of Covid or the Saudi.
Therefore, we do not have a particularly robust growth supply that we expect to see in the next two years and to get 6 Bcf in the next two years, I mean that would be like the equivalent of going back to the frothiest years of shale growth that we've had - not going to happen.
6 Bcf coming online and a big quesiton of where we're going to get it from. Even if you open up even a little bit of export capacity, you could potentially see a market that pins itself on global prices and go from $3 to $10 very quicky.
How do we have a NG Glut when we were +22.7 above the 5-year average at the beginning of March 2023. Now, 8 months later (during the build season) we are now at +5.7% above the 5-year average with all the so called "record setting" production.
Re: Ng glut!!
Natural gas at $3.00 is not the "Sky is Falling". That is the price I am using in all of my Q4 forecasts.
All of our "gassers" are profitable at this year's low gas prices. These companies have survived many years of low gas prices.
There is no GLUT. I hate that word. Demand for U.S. natural gas is over 36 TRILLION CUBIC FEET PER YEAR, likely to increase to 38 TCF in 2025. The 0.2 Tcfe surplus in storage to the 5-year average is a ROUNDING ERROR.
During previous winters we have had weeks where over 300 Bcf is drawn from storage during a normal winter.
All of our "gassers" are profitable at this year's low gas prices. These companies have survived many years of low gas prices.
There is no GLUT. I hate that word. Demand for U.S. natural gas is over 36 TRILLION CUBIC FEET PER YEAR, likely to increase to 38 TCF in 2025. The 0.2 Tcfe surplus in storage to the 5-year average is a ROUNDING ERROR.
During previous winters we have had weeks where over 300 Bcf is drawn from storage during a normal winter.
Last edited by dan_s on Fri Nov 10, 2023 9:48 am, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Ng glut!!
Fraser, are we going to see pics of you in a G string from the Puerto Vallarta luxury pool next week? Please don’t eat the charro beans to add to more glut in gas supply.
Re: Ng glut!!
What a crock. Fraser loves to hear himself. We don't have a glut even though he says so with no backup. we are 10% above the average storage level. But Fraser says 10% is a glut. I sold all my NG stocks a long time ago after the LNG plant was shut down. So I'm not married to the stocks but just don't like it when a respected member of this forum makes such radical statements with absolutely no backup information. Reminds me of those who support Hamas.
Re: Ng glut!!
What a crock. Fraser loves to hear himself. We don't have a glut even though he says so with no backup. we are 10% above the average storage level. But Fraser says 10% is a glut. I sold all my NG stocks a long time ago after the LNG plant was shut down. So I'm not married to the stocks but just don't like it when a respected member of this forum makes such radical statements with absolutely no backup information. Reminds me of those who support Hamas.
Re: Ng glut!!
Hey Allen46
How about you take a breath and ease up with the attacks? A few months back I told you that your tone was a bit out of place for a forum like this when Frazer and I were lamenting the fact that Dan was saying VITAL was worth $120 and we were getting killed. Now, you're back to cracking again, while the gas producers have been over-producing for the last 12 months, and the gas stocks have absolutely been hammered. A 60% correction in Comstock should permit some complaining but I guess not in your world.
How about you take a breath and ease up with the attacks? A few months back I told you that your tone was a bit out of place for a forum like this when Frazer and I were lamenting the fact that Dan was saying VITAL was worth $120 and we were getting killed. Now, you're back to cracking again, while the gas producers have been over-producing for the last 12 months, and the gas stocks have absolutely been hammered. A 60% correction in Comstock should permit some complaining but I guess not in your world.
Re: Ng glut!! CRK now single digits
Allen you want proof? 
CRK now single digits!
I tried to help you, only for you to come unglued!
Still have year end tax selling to get thru.
You only need to get a double to get back to 20 from a year ago when I shouted SELL!
CRK now single digits!
I tried to help you, only for you to come unglued!
Still have year end tax selling to get thru.
You only need to get a double to get back to 20 from a year ago when I shouted SELL!