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Already have backed it up...
Almost all my investment dollars are in 2018-19 natgas futures contracts. I would be interested in green tech, but it's not like us to do something that altruistic - better to leave the medicare, social security, national budget, and environmental...deficits to the next generation. The buck stops 20 years from now, right?
Why do you think the futures market is correct for 5 years out? You do realize those prices will change as more info comes in and and market dynamic change, right?
I believe there is downward pressure on those prices from drillers that are almost bankrupt and who sell production forward to get more assets on their books.
There is also A POSSIBILITY that nefarious forces are at work - it could just be that there is pressure to keep current pricing and the forward curve low until desired regs get passed on LNG exports, natgas transportation infrastructure and vehicle incentives, lax enviro regs to the degree possible....and perhaps most importantly - industry consolidation (Exxon just snapped up another property today for $3B). I have no proof, but it sure is interesting how long and how low natgas pricing has been. Stranger things have happened.
I am guessing we see the $6-$7 number in 2 -3 years. By that time, the effects of the 'Gold Rush' will be over and the issues above will be resolved.
Don't believe everything you read from the govt, oil & gas industry, industry rags, institutional research, tv, etc. I am sure you realize how big money can marshal a lot of resources to paint a reality that is just not there (eg., dotcom, housing, tulips).
I explained in my original post why I think the cost for the marginal MCF is $6 - $7. If you are making investments based your your $5 number, I would suggest you keep up the data coming out for independent sources - esp. on EURs.
Here's an interesting presentation - not on EURs but marginal costs to meet demand - notice these are HALF cycle costs - they do not include LAND and GSA costs. This is Encana's investor presentation from this summer - specifically the graph on the bottom of page 9.
http://www.encana.com/pdf/investors/presentations-events/investor-day-market-fundamentals.pdf
What's that? $6 to meet marginal demand based on 2011 prices. ...And this is coming from a producer - someone who has an interest in underestimating costs.
Going to have to add $1 - $2 per mcf for Land and GSA - let's be conservative and go with $7 based on 2011 costs. You gave a forecast for the next 5 years - that takes us to 2017 - which means 6 years of inflation from the Encana 2011 study.
Let's assume Bernanke can devalue the dollar 4% per year against energy assets...that gets us to $8.86 pesos - assuming demand does not increase - assuming present production from the core is representative of future production which will increasingly involve the fringe. You might be wrong about your projection.
You are correct in guessing I lean toward environmentalism - a long-term view of things - caring about the welfare of not just spotted owls but our children...as opposed to trying to figure how we can pull hydro-carbons out of the ground as fast as we can, and burn them so we can drive around 5,000 lb high riding vehicles. I think we will ashamed when we look back on this time given the facts we already know.
I have made an over 1,200% return these last 10 years in my IRA. This is last my last bet - a bet we will 'connect' the price of natgas to oil and/or the world natgas markets - OR - we will find that there are big problems with carpet-bombing the countryside with shale gas wells. All or one of these will lead to much higher natgas pricing - no conspiracy required...and provide me more time to focus on sharing the msg of my website:
http://www.ArrestIndustrialDisease.org
Why do you think the futures market is correct for 5 years out? You do realize those prices will change as more info comes in and and market dynamic change, right?
I believe there is downward pressure on those prices from drillers that are almost bankrupt and who sell production forward to get more assets on their books.
There is also A POSSIBILITY that nefarious forces are at work - it could just be that there is pressure to keep current pricing and the forward curve low until desired regs get passed on LNG exports, natgas transportation infrastructure and vehicle incentives, lax enviro regs to the degree possible....and perhaps most importantly - industry consolidation (Exxon just snapped up another property today for $3B). I have no proof, but it sure is interesting how long and how low natgas pricing has been. Stranger things have happened.
I am guessing we see the $6-$7 number in 2 -3 years. By that time, the effects of the 'Gold Rush' will be over and the issues above will be resolved.
Don't believe everything you read from the govt, oil & gas industry, industry rags, institutional research, tv, etc. I am sure you realize how big money can marshal a lot of resources to paint a reality that is just not there (eg., dotcom, housing, tulips).
I explained in my original post why I think the cost for the marginal MCF is $6 - $7. If you are making investments based your your $5 number, I would suggest you keep up the data coming out for independent sources - esp. on EURs.
Here's an interesting presentation - not on EURs but marginal costs to meet demand - notice these are HALF cycle costs - they do not include LAND and GSA costs. This is Encana's investor presentation from this summer - specifically the graph on the bottom of page 9.
http://www.encana.com/pdf/investors/presentations-events/investor-day-market-fundamentals.pdf
What's that? $6 to meet marginal demand based on 2011 prices. ...And this is coming from a producer - someone who has an interest in underestimating costs.
Going to have to add $1 - $2 per mcf for Land and GSA - let's be conservative and go with $7 based on 2011 costs. You gave a forecast for the next 5 years - that takes us to 2017 - which means 6 years of inflation from the Encana 2011 study.
Let's assume Bernanke can devalue the dollar 4% per year against energy assets...that gets us to $8.86 pesos - assuming demand does not increase - assuming present production from the core is representative of future production which will increasingly involve the fringe. You might be wrong about your projection.
You are correct in guessing I lean toward environmentalism - a long-term view of things - caring about the welfare of not just spotted owls but our children...as opposed to trying to figure how we can pull hydro-carbons out of the ground as fast as we can, and burn them so we can drive around 5,000 lb high riding vehicles. I think we will ashamed when we look back on this time given the facts we already know.
I have made an over 1,200% return these last 10 years in my IRA. This is last my last bet - a bet we will 'connect' the price of natgas to oil and/or the world natgas markets - OR - we will find that there are big problems with carpet-bombing the countryside with shale gas wells. All or one of these will lead to much higher natgas pricing - no conspiracy required...and provide me more time to focus on sharing the msg of my website:
http://www.ArrestIndustrialDisease.org
Edited by brazil_83
Updated - 17th Oct