All this tells me is that for "most" shale resources, price must be at $3.50 mmcf plus reasonable return (15% on cap?) for production to continue in "most" shale resources. In a supply and demand enviromnent, price is detemined at the margin, most eager buyer and seller, not what "most" would sell or buy at.
How much of NA production comes from "most" shale production?
But the key question is ...Can shale and LNG imports refill the storage tanks for next winter?
Conventional wells are not profitable at the current prices, and need a much higher price to put rigs back to work in this area.
Go back and read 5K's post of the Raymond James summation of the NAPE 2010 conference that recently occurred in Houston. Production break even has been lowered to the $3.50 mark for most of the shale plays.
This is the REALITY of Natural Gas. Now it is up to the inside TRADERS to lower the price as much as possible, so they can BUY in BIGTIME, which I think, last Friday at $8.65, was where they found support, so I bought in at $8.71. This is WAY OVERDUE for a rebound.
this guys views seem to be inline with the elliott wave theorists prediction of an expanding nat gas triangle. EW is calling for 24-39usd and this guy calls for a 7 floor, then 10, then chaos in 2011. that could coincide with the EW triangle. hmmm. while ung is not perfect in its tracking of gas, rapidly expanding prices would most likely establish backwardation and that could mkt for crazy returns in ung. all this remains to be seen however. i think the risk is probably worth it at this price.
When they estimate we now have 100 years worth of nat gas right here at home, I have to wonder if this guy isn't getting ahead of himself. We seem to have tons of coal and nat gas in reserve, just not enough oil. And folks wonder why the ratio of a btu of nat gas versus oil is so high!!?? They discover oil reserves it seems like fairly often (Gulf of Mexico, Africa), but it tends to be deep on the ocean floor and very expensive to extract. If oil doesn't stay above $50 or $60 a barrel, its not worth drilling the deep water oil. The shale gas, on the other hand, is on land and getting more inexpensive to extract as they get better at it. I'm just looking at what's actually happening, not predictions, and I see plenty of nat gas and coal on land. Oil seems capped at a fairly high price. Otherwise, only low cost above ground oil will get extracted and deep sea diving excursions get put on hold.