been playing the drop in nat gas since last summer. I really believe we hit 4TCF before withdrawals start. If winter is mild, will gas collapse? Sub $2?

If we don't have a cold winter I think its possible to see it hit that low, but it is definitely short term. There are a lot of interesting dynamics that I personally haven't decided where I think gas is going. In the gulf coast region you have increasing demand from chemicals, exports to Mexico, and some LNG exports starting to come online. At the same time you have decreasing associated gas production from reduced drilling for oil. Barnett and Fayettevile cannot be drilled economically and Haynesville is a stretch. You have some seemingly high rate gas wells in the SCOOP/STACK in Oklahoma but producers in these areas don't have the cash flow to drill too much. So if we have a normal winter I could see an argument for NYMEX see a move up from these levels.

You have an entirely different story in the northeast. Appalachian gas basically has no escape from the basin, except for a few projects coming online. Operators continue to drill highly prolific Utica and Marcellus wells. I personally am not sold of PA Utica , it reminds me of Haynesville, high IP and very steep decline. I don't think it is economic at these prices. This market must have a cold winter this year or it could make for a horrendous summer next year. As it is already operators are shutting in production because it is uneconomic to produce. Last summer southern Appalachian prices fell to less than 50 cents because there was literally nowhere for the gas to go.

So if you think its going to be a warm winter, then yes $2 is possible, but at that price I think you have many operators that starting looking at shutins because they are very close to breakeven on production. This time next year I think you can begin to make a case for a meaningful increase in gas prices, perhaps approaching $4 next winter.

Our index price here in the Rockies is around $2.13 at the moment, so it is very conceivable for us to go sub $2 in the near future. Chemeag12 is right in that we are starting to see operators shut in wells in and around some of our basins as we get closer to $2. I'm still hopeful that gas is a long-term play and that we will continue to see demand growth as more gas fired plants come online and exports increase. However, it does seem like we've been saying that for a while now so hope is a little fleeting for a lot of people in the business.

Marcellus margins are already sub $1.00. I'll probably be out of a job if prices don't improve this winter.

long term i'm bullish gas. but, we are certainly in for some short term pain.

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Marcellus margins are already sub $1.00. I'll probably be out of a job if prices don't improve this winter.

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That's rough! I personally don't see how companies can make money in the NE. We had a Utica program a few years that didn't pan out, but even if it did I'm not sure that it would have been profitable to operate long term. Labor and equipment rates were absolutely ridiculous in comparison to other areas of the country. I'm sure some of that has changed with the downturn, but it was tough getting things established. Not to mention the administrative red tape was almost insurmountable.

Bump!

$1.79 at a half dozen gas stations in Galveston this past weekend. Soooo at least that lol

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$1.79 at a half dozen gas stations in Galveston this past weekend. Soooo at least that lol

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I believe these folks are talking natural gas, not gasoline.

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$1.79 at a half dozen gas stations in Galveston this past weekend. Soooo at least that lol

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$1.79 at a half dozen gas stations in Galveston this past weekend. Soooo at least that lol

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Wow! Hope not serious...

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$1.79 at a half dozen gas stations in Galveston this past weekend. Soooo at least that lol

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Hahah

Damn, what I get for just reading the Title and not the inside of it. Sorry for the derail lol