Replies to This Discussion

Permalink Reply by Michael Sasarak on January 13, 2015 at 11:08pm

http://www.cheniere.com/LNG_terminals/terminals.shtml we're almost there. Projections for the terminals ~2015

Permalink Reply by Jack Young on January 14, 2015 at 2:02am

Thomas Lilli's comment about the price of oil and gas having a direct relationship was somewhat accurate maybe 30 years ago, but not in recent times. The old pricing ratio was about 11 to 1, but we've seen figures as high as 30 to 1 in recent years. LNG tends to be sold on long-term fixed contracts, and those prices are generally locked in. Spot cargos of LNG can sell for almost anything, however. It was that way even 30 years ago when I worked marketing LNG for Distrigas in Boston. It's a great product, but has plenty of characteristics that differentiate it from natural gas and oil, so the value will never match up with either exactly.  It's useful for more than just vaporization and sale into a county's natural gas pipeline system. It has peak-shaving abilities that no other fuel can match, and so is extra valuable on cold nights like we just had.

Permalink Reply by Thomas Lilli on January 14, 2015 at 3:02am

Good input thanks Jack. What I read, wi read about a year ago on an industry analyst publication.

Permalink Reply by Ann Ticopa on January 15, 2015 at 3:14am

"Oil Price Drop Disrupts Japan’s Energy-Import Strategy ...Traditionally, Japan bought natural gas from suppliers in Asia and the Middle East under contracts that tied the natural-gas price to oil prices. After the Fukushima Daiichi nuclear accident took nuclear-power plants offline, Japan’s natural-gas costs grew by tens of billions of dollars a year.

http://blogs.wsj.com/japanrealtime/2014/11/06/oil-price-drop-disrup...

..."

Permalink Reply by Jack Young on January 15, 2015 at 10:09am

Fixed term LNG contracts can be tied to anything the buyers and sellers want. One of the major US LNG terminals went bankrupt during the Arab oil embargo when oil prices (which controlled their costs) went up and we had a warm winter so natural gas prices fell. Most importers try to avoid tying LNG prices to oil these days. What I was talking about is the relationship between spot oil and natural gas - the old semi-fixed ratio there is gone.

Permalink Reply by Christopher Meehan on February 25, 2015 at 2:49pm

Curious if this has happened to anyone besides me, our gas lease is up in Sept and Talisman has contacted me through a private land man. Our lease has a 5 year extension clause, same or less for the next 5 years. They offered 1000 less an acre. PVR is putting a pipeline through our property that is going to connect to one of their wells behind our property. I told the land man this and he was surprised, said he was going to go back to them to see if we can get more $$. I find this strange since this is 10 months early. He kept saying that I shouldn't try to play hardball because they would leave me out of the unit. Something is going on.

Permalink Reply by Christopher Meehan on February 25, 2015 at 3:38pm

Thanks Josie!

Permalink Reply by David on February 26, 2015 at 3:03am

I have spoken to Greg on several occasions and has always been a straight shooter.

Permalink Reply by Frank Walker on February 26, 2015 at 8:12am

Christopher

Here is what is going on:

We're slowly emerging from the coldest winter in recorded history, while simultaneously the price of NG cannot reach even a measly $3.00.

Permalink Reply by Frank Walker on February 26, 2015 at 11:11am

Outside temperature is obviously an important determinant of demand.

But I agree right now we have a massive, intractable, oversupply problem.

Permalink Reply by Ann Ticopa on February 27, 2015 at 4:39am

Josie, that's similar to what I was about to ask.  Anyone care to predict just how much actual drilling SWEPI is going to do in 2015?  They do have a bunch of outstanding drilling permits, but applications have dropped off now.  Also, I was on the list of people to contact in Nov/Dec about leasing.  But it was more like they were going through the motions rather than actually negotiating.

Permalink Reply by Ann Ticopa on February 27, 2015 at 6:08am

Oops, I should have mentioned that I was referring to SWEPI's gas production in Tioga Cty, not Shell Chemical's proposed ethane cracker in SW PA.

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