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Encana Corporation Message Board

  • pptxxx pptxxx Aug 21, 2009 8:36 AM Flag

    Natural Gas at 7-year low

    Natural Gas at 7-year low

    “It is tough times in the gas business, certainly,” said Thomas F. Darden, chief executive of Quicksilver Resources, a major natural gas producer, after the government stockpile report was released. “Prices today are below our costs to produce, so in our view this is not a sustainable scenario.”

    “Gas executives, who have already cut back severely on drilling new wells this year, say they are loath to cut production on wells already completed, but they may have no other choice if the storage system and pipeline network get backed up.”

    “We have never been here before in terms of what to expect when storage gets this high,” said Aubrey K. McClendon, chief executive of Chesapeake Energy, another major gas producer. “It’s like a balloon; there comes a point where you can’t blow any more air into it.”

    The above says it all – they will not or can not stop pumping because they really need the cash flow.

    Encana could easily cut back 1/3 of their non-hedged production but can’t because of their financial obligations.

    The writing is on wall – but watch the stock go up this morning.

    September NG is currently trading at $ 2.887

    When the crash comes in will be sudden.

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    • Is there any reason addtional storage wont be made? Actually long term there might be a need for more nat gas storage capacity, because demand will grow. Todays situation is really unusuall. Combined factors like recession, slower oil sands developmnet, and some recent new found nat gas, not to mention years of unusually warm winter and now cool summer could easily go the other way in a year or two. Even the demand for ammonia fertillizer made from nat gas is way down this year. Easy to see long term much higher prices. jmho.

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