Now before you guys say BS to the Shale Tale that I'm about to spin, consider this: seven years ago you would have been considered a lunatic if you forecast that NG would trade at over a 4 to 1 deficit to Oil on a BTU Coefficient basis. Back then Rig Counts were building for NG and it traded higher at times than Oil on a the BTU coefficient basis. At $100 oil, NG should be trading at $16 plus and it does so in many of the global markets.
So here goes the tale:
Clinton Administration signs off on NEGRA (NATIONAL EMERGENCY GAS REFORM ACT)
Lame duck President Hillary Clinton has had enough with crippling Natural Gas prices and largely blames the EIA for their rosy forecasts early last decade. It was not the Obama Administrations fault. It was the EIA that was duped by the Republicans and their lobbyist representing the Big Oil and Natural Gas companies said Clinton.
Effective immediately we will no longer be exporting 20bcfd of Natural Gas, all export licenses will be cancelled.
Natural Gas currently trades at 40/mcf while Oil is only $150 a barrel. The situation has become untenable, we have had to curtail supplies to industry in order not to interrupt residential needs (footnote, this happened in the 1970's NG crisis).
Furthermore said Clinton, we have had to lower thermostats in all government buildings to 58 degrees during winter months, shift school schedules in many states. Summer vacation in the north is now winter vacation instead so we don't have to heat these schools during the winter time.
The US Natural Gas demand is now 80bcfd a day and we have foreign exports of 20bcfd a total of 100bcfd of Demand. Yet we are only producing 75bcfd and struggling to increase supply.
Natural Gas Storage is down to 900 Bcf. Only a few years ago we had over 3.7tcf in storage. We are going to run out of storage within 60 days if drastic action is not taken immediately. The Arab Oil Embargo of 1973 will be nothing compared to the looming Natural Gas Crisis that we are facing.
Therefor, in order to protect the American People I am proud to announce this drastic yet necessary measure of immediately canceling all LNG export licenses.
Failed Republican candidate Ted Cruz (Hispanic) stated NEGRA means black in Spanish and that President was painting an overly dark bleak picture, that market forces would prevail and pointed out the rising competitiveness of Wind & Solar in the current pricing environment. The Reverend Jesse Jackson and Al Sharpton stated that the Bill was appropriately named, that the Black people were being hit the hardest and that Natural Gas should be provided for free to poor communities.
In a surprise and somewhat shocking move, newly elected President Bobby Jindal says he will not repeal NEGRA (National Emergency Gas Reform Act) passed by President Hillary Clinton.
Jindal stated that while NG exports have largely corrected the balance of trade deficiencies with oil, it simply doesn't make sense. The amount of energy to Liquify and Transport LNG is enormous, our country's interest would be much better served to use our NG at home and not rely on imported oil. Why are we exporting and importing simultaneously and wasting large amounts of energy in the process stated Jindal?
We aren't going to kill the LNG export companies immediately but we are going to phase them out and dedicate significant sums towards continueing the build out of the transport sector infrastructure.
Our countries Natural Resources should largely be used locally and the waste of energy both from import and export components figures largely into this equation. There will be a large reorganization of the EIA and it will not rely on lobbyist or industry sponsored studies in the future - they blew it said Jindal, and my administration will remedy the situation. We will be energy self sufficient and no longer patrolling Mideast Oil Interest. The savings on Military expenditures will be enormous.
Coal burn is coming into play at current NG pricing. Marcellus backlog completion is the main factor in keeping NG supply flat and it should largely be worked thru by EOY. Weather is not helping much this simmer, but cool summers usually lead to cold winters.
Anybody care to speculate on NG prices come February 2014?
Well, Hillary is already a bit lame and looks like a duck. She isn't President yet, but likely the best candidate for the Democrats if she wants to run.
Cove Point looks like a shoe in for the next LNG export terminal to get approved. It will be fed by the Marcellus - another 1.8bcfd and online by 2017/18. We may well see 20bcfd capacity of LNG Export plants get approved.
Anyhow, I though I'd throw out a fun topic to discuss for the weekend. If NG were trading at a 4 to 1 positive coefficient to oil it would be over 65/mcf now. Nobody in their right mind would have thought the Oil to NG ratio would get comparably out of line a mere 7 years ago.