unsigned

Anyone here from the Pulaski area unsigned as of this time? Curious if offers have increased or stopped altogether.

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Permalink Reply by Jim Litwinowicz on January 24, 2012 at 2:52am

If you are unsigned, I would strongly urge you to consider signing soon. The precipitous drop in gas prices has drillers reconsidering their plans.  Look at CHK's announcement of reducing drilling dry gas by a third. Other companies are also looking at options. Only a matter of time before bonus offers also drop...if not stop altogether.

Yesterday on CNBC, there was talk that gas will be below $2 this summer as storage fields reach capacity. If it gets that low, oil and the wettest gas areas will be the only game they will want to play.

If you don't sign soon, you may get left out for four or five years when prices finally start to rebound.

Permalink Reply by Daniel Rupert on January 25, 2012 at 2:14am

Jim,               Good Morning...I agree with your assesment that @ 2$...oil and wet gas will be the only game. The statement of getting left out 4 or 5 years until prices start to rebound...that is a little fear-mongering in my opinion. NG was around 2$ 10 years ago...it peaked @ 13$ in 2008...and is @2.62 a btu right now. I have property in Elk which is where dry gas is and it is quiet right now. Probably will be all of this year and some of next year. Energy commodities are known to fluctuate rapidly...look @ the charts...they don't lie. There is a glut of NG right now...this because the supply is large and the demand is low...this will not be the case for long! Look for record numbers of CNG new cars and conversions each quarter for the next three years and beyond...record numbers of CNG fueling stations...record numbers of power plants switching to NG...Cracker Plants for the mfg. of plastics...record exports of NG as ports come on line. All of these factors will come into play...and if our leadership decides to develop a National Energy Plan...the game will change completely. Nobody knows for sure...

Permalink Reply by Daniel Rupert on January 25, 2012 at 2:26am

BTW...The State of Pennsylvania has 162,000 vehicles in their fleet...they are working on a plan to convert and replace these vehicles to CNG. This is just one government entity...just think of all the government entities in the US...think of all the Metro Buses that have switched and are in the process of switching...look @ the Trucking industry...look @ the number of business fleets...small and big...then finally, look @  all of the personal vehicles on the road today. The demand is growing...just at a slower pace than it should with OIL @ around 100$.

Permalink Reply by Daniel Rupert on January 25, 2012 at 2:29am

One last thing...Chesapeake is investing $1,000,000,000.00 over the next 10 years to develop more CNG vehicles...look for more of the same from others.

Permalink Reply by Jim Litwinowicz on January 25, 2012 at 3:45am

To compare the current gas supply to the 2000 to 2008 cycle is inaccurate. The new horizontal fracking is a disruptive technology that has changed the game. With over fifteen shale plays in the US alone, the supply of gas will remain very high for many years. As demand increases, suppliers can quickly ramp up production to meet any new demands. Gas will remain very affordable for a long time.

Conversion of vehicles will also take many years. Just to build all the kits, train the installers, get them in place in the 255 million vehicles  ( http://en.wikipedia.org/wiki/Passenger_vehicles_in_the_United_States )    will be a monumental task. Add in the time it will take to install CNG/LNG fueling stations and the pipeline/delivery system to supply them.

There was a six month backlog for gas electric turbines before the Japanese quakes destroyed their nuclear plants. It is even longer now. Exports will help but there are shale plays all over the world. Other countries will also be using these disruptive technologies to produce their own supplies of nat gas.

Converting a giant industrial complex form oil and coal to nat gas will take time....and the gas supply can increase substantially along with that demand.

I hope I am wrong and you are right as I have leased my gas rights and would love to see a high enough royalty to retire on once I am placed in a unit and wells are drilled. But I don't see prices much above $5/MCF (annual average) for many years to come

Permalink Reply by Jim Litwinowicz on January 25, 2012 at 3:49am
Permalink Reply by Jim Litwinowicz on January 25, 2012 at 5:16am

It would be very interesting to do the math to see what impact a 10% or 25%  conversion of vehicles to CNG/LNG would have on gas supplies and pricing.  Perhaps if I get the time next week, I will see what I can find.

I'd have to find what mileage various vehicles get on LNG/CNG , figure how much nat gas they would use, and figure what percentage of total nat gas supplies that would be.

I'm sure that somewhere people have done that....just have to find it.

Permalink Reply by Daniel Rupert on January 25, 2012 at 6:40am

I have wondered about the impact as well...incredible possiblities nonetheless...EQT and Giant Eagle have their own CNG fueling stations for their fleets here in Pittsburgh. I do see more and more CNG vehicles on the road as each month passes. Here is something to chew on...imagine our government initiating a NATIONAL ENERGY PLAN that works in conjuction with the EPA to eliminate dirty Diesel emmissions from the Trucking Industry. This would improve the environment, reduce our dependence on OPEC oil and reduce operating costs for trucking companies. This one industry switching to CNG would have a huge impact on the Natural gas industry specifically and our economy in general. I guess it makes too much sense.

Permalink Reply by Daniel Rupert on January 25, 2012 at 6:57am

See story on Compressed Natural Gas For Vehicles post...250 Peterbilt tankers recently purchased by a local company that are run on natural gas...it's happening...slowly...but it is happenning! I have been saying our government needs to be pro-active...not reactive for three years!!! NATIONAL ENERGY PLAN...long, long OVERDUE!!!

Permalink Reply by T.Fiore on March 9, 2012 at 6:24am

I am unsigned in Pulaski.. Not very happy with the first lease offered by Shell.  waiting for our attorney to make the needed changes and Addenda.                 Anyone see any benefit in holding out and waiting for a couple months before signing?

Permalink Reply by mike on March 9, 2012 at 12:25pm

T.  I dont know but I am holding out 113 ac N beaver 2 mile from me  is Pettersburg Ohio $5800.00 20% if I had that then I would go it doesnt run out @ state line. Mike

Permalink Reply by Ragnars Repo on March 13, 2012 at 2:27am
I have held out for a while now and am considering signing. Offers have not changed in about 6 months and i have a fighting chance at being in a hilcorp production area.

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