tag:blogger.com,1999:blog-1236895917331192509.post835279099419388367..comments2023-05-17T04:01:26.506-04:00Comments on The Neutron Economy: Wishful thinking on natural gas pricesAnonymoushttp://www.blogger.com/profile/12086026121605548134noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1236895917331192509.post-27313463841961128302012-08-31T20:44:56.063-04:002012-08-31T20:44:56.063-04:00@Robert: Absolutely true; I glossed over this poin...@Robert: Absolutely true; I glossed over this point, but natural gas is inherently a regional commodity, not a global one. The economics of nuclear are far different outside the U.S., especially in places which lack for abundant coal and/or natural gas resources.Anonymoushttps://www.blogger.com/profile/12086026121605548134noreply@blogger.comtag:blogger.com,1999:blog-1236895917331192509.post-23372507290483978942012-08-31T20:40:48.956-04:002012-08-31T20:40:48.956-04:00Of course other parts of the world do not have acc...Of course other parts of the world do not have access to cheap pipeline gas. This is why we see nuclear construction in South Korea and the UAE while the US remains stagnant.Roberthttps://www.blogger.com/profile/17241570405761457031noreply@blogger.comtag:blogger.com,1999:blog-1236895917331192509.post-70175181860819512502012-08-31T17:45:23.274-04:002012-08-31T17:45:23.274-04:00@Meredith: Some very good points you bring up. I d...@Meredith: Some very good points you bring up. I did neglect to look at new wells being drilled, and I suspect you are correct here - what we are seeing is basically an equilibrium being established. With the proliferation of hydraulic fracturing, everyone rushed to drill new wells, causing supplies to spike and prices to plummet. Suddenly, the price of gas is going for too low to recover the initial investment. <br /><br />If anything, I suspect you are correct that we will likely see an equilibrium develop around say $5-6; i.e., as prices stabilize and one can recover a net profit from new wells, the number will creep up again - slowly. That's kind of what I'm getting at in a roundabout way (and something I want to discuss about uranium prices in a future post); exploration tends to follow price. If the price collapses, so too will exploration; and vice versa. I suspect we agree on this point.Anonymoushttps://www.blogger.com/profile/12086026121605548134noreply@blogger.comtag:blogger.com,1999:blog-1236895917331192509.post-29053001378471870012012-08-31T16:56:00.539-04:002012-08-31T16:56:00.539-04:00Hi Steve.
Super post on "doing the numbers.&...Hi Steve.<br /><br />Super post on "doing the numbers." <br /><br />But can we trust the numbers?<br /><br /> I trust production numbers. I trust consumption numbers. I don't trust "proven reserve" numbers, because they can be manipulated to justify various things, such as borrowing money for drilling. <br /><br />One number you didn't look at was "active drilling rigs looking for gas." That number is at a multi-year low. On an earlier post of Rod's, I commented and quoted two Forbes articles saying that shale-gas is expensive to produce, and isn't worth drilling for unless you can get $6 MMBtu. Other Forbes articles encouraged investors to avoid natural gas-based stocks because they are "running through their capital and taking out lines of credit." (Or words to that effect...there should be links in my comment on Rod's earlier post. Or Google Natural Gas and Forbes.)<br /><br />In other words, with few rigs operating, I don't expect $10 gas, but I DO expect $5 or $6 gas (near the production cost) within about 3 years. When this current over-production is burnt off (literally). <br /><br />Why 3 years? Because shale wells don't tend to have a long production life, but there are a lot of shale wells out there right now, so my guess is...3 years. I am allowed to guess. Am I putting a wager down on this? If you want, I will. Not what I usually do. <br /><br />Wager: $10 says gas will be at $6 at the Henry Hub by the end of 2015. You want to take that one? Or do you agree with my position? Or...???Meredith Angwinhttps://www.blogger.com/profile/02737538041807740424noreply@blogger.com