Energy Prospectus

Per today's Doomberg subscriber piece there is a massive supply of worldwide LNG capacity coming online by 2030 including projects in US, Canada, Qatar, Saudi Arabia, and Russia. Thus the idea that US prices will be moving closer to worldwide for gas the opposite may in fact be closer to reality with global prices coming down closer to US domestic pricing. That along with ever increasing associated gas coming from Permian is a bit of a buzzkill for long term outlook for natural gas and even worse for coal markets. Here is an excerpt:

"Up and down the supply curve, other major natural gas producers are ramping up their LNG export capacity. Canada will begin commercial shipment from its first terminal in British Columbia in 2024, while the giant Arctic LNG-2 project in Russia looks set to come online in only a few weeks. Arctic LNG-2 is just the first in a series of planned expansions by Russia. Even Saudi Arabia, which has long been a natural gas laggard, is jumping into the market in a huge way. The country “aims to spend $110 billion developing the Jafurah gas field that will help double output by 2030 and make the kingdom a gas exporter for the first time.”

Just remember that the global market for natural gas is growing much faster than the global oil market because it is the "Clean Fossil Fuel".

In the 1990's the U.S. natural gas market was 20-25 Bcf per day. Today it is over 100 Bcf per day and still growing.

Looks like it will be a real battle between Doomberg’s supply thesis and Jevon’s demand paradox for price.

Maybe Nate Hagens could get the Green Chicken and Adam on a podcast to discuss. My take is Adam is fundamentally right but demand timing is unpredictable. My view is the timing of new supply of LNG is pretty predictable notwithstanding the Jennifer Granholm Energy Department foot on the brakes or whichever of the Deep State is doing so. On the other hand the demand side will respond when the gas is available but with the need to get pipelines to the new demand there will certainly be choppy waters and likely impair prices to the downside.

The Doomberg piece got me thinking about some of my coal holdings - I have a couple of Auzzie thermal coal producers whose valuations are as depressed as the likes of SBOW and VTLE - the only difference being while the produce a lot of Op Cash Flow their Free cash flow is also very strong because capex is minimal (vs huge capex for the Shale O&G guys just to stand still). I had not really focused on how much LNG was coming on stream in the Qatar etc - while not an immediate threat to Auzzie thermal coal (given the sheer size of coal power build in China, India and Indonesia), its certainly something I will be watching.

Despite all the noise coming from COP28, global demand for oil, natural gas and coal will increase each year for many more decades.