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December 17, 2015


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i was just thinking about this...natural gas contracts are at $1.75 per mmBTU, the lowest ever on an inflation adjusted basis and the lowest ever for a January contract in 25 years of NYMEX trading...last week, NY city spot gas was at $1, and PA pipeline gas was at 48 cents...as you must have noticed, it's been warm, and no one is using much gas...there is real fear among industry insiders that if the warm weather continues, they'll run out of space to put what's being produced...so i'm betting they'll throw everything they got at opening those Seneca Lake salt caverns to store the surplus...

Jodi Dean

I've been wondering about that. For them, the storage is pretty cheap (the salt caverns are there and they are not planning on lining them). But they still have to put money into the infrastructure. With prices so low, isn't it possible that they will cut their losses?


output from PA & OH wells hasn't gone down much, if at all...i suppose theoretically they could shut them in, but right now most of the frackers need that cash flow just to pay interest on their debt...

on the other side of the coin, if they can store cheap gas until next winter, they'd be betting prices would higher then, and they'd be in a position to profit from the contango...

so i tend to think that this year is crunch time...if they dont get it this year, then they're likely to abandon the effort...


here's a graphic on shale gas output...


you can see why they're looking for more storage space...

Jodi Dean

thanks for this


Jodi, are you and other Senaca Lake people following the Aliso Canyon gas leak story? biggest gas storage site in California has been leaking since October, 100,000 pounds of methane per hour, it's being compared to the BP oil spill...wealthy suburbs of LA, including Porter Ranch, have been evacuated...they dont have a fix, say it will leak at least till a relief well is drilled this spring...
a few links from this week:

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