Good For Natural Gas Stocks
The shock Northeaster blowing across the japanese United States may have confirmed the final bottom for hibernating natural gas and coalbed methane (CBM) firm shares. The winter storm adopted this past Tuesdays Power Information Administration (EIA) Brief-Term Vitality & Summer season Fuels Outlook.
The EIA forecast greater natural gas prices, this summer season, while spot WTI crude oil costs are expected to decline. On an annual basis, the Henry Hub spot value is predicted to average about $7.83 per mcf in oil and gas refinery equipment group 2007, an 89-cent enhance from the 2006 average, and $8.11 per mcf in 2008. The EIA expects summer season 2007 natural gas costs to rise by 17.7 p.c over the previous summer. For this 12 months, pure fuel costs would improve by 12.8 % over 2006.
The statistical arm of the U.S. Department of Power cited, Concerns about extreme weather circumstances and rising prices in the oil market will keep upward stress on the Henry Hub spot value during much of the forecast interval. The report identified that electric energy demand for natural gas increases during the summer time cooling season.
By the third quarter the EIA expects, The trend will accelerate throughout the height of the cooling season. The rest of 2007 bodes well for CBM and pure fuel investors because spot costs are once more forecast to start a climb towards a winter peak.
The Nationwide Oceanic and Atmospheric Administration projection for heating and cooling degree days signifies a rise of 8.4 p.c more residential consumption of natural gas during summer 2007. In accordance with the EIA, there will likely be eleven percent more gas weighted heating degree days this summer.
On March thirtieth, natural gas storage ranges stood at 127 Bcf under the comparable level a year in the past. Final years storage surplus clobbered many of the CBM hopefuls in late spring and by way of the summer. This yr, the storage story has begun to reverse. This weekends unhealthy weather may end in one other drawdown, and CBM firm shares might bounce a bit larger as was seen in mid winter.
Coalbed Methane Stocks in Play Once more
In late January, BP set the tempo for renewed curiosity in coalbed methane (CBM) by announcing it planned to speculate $2.Four billion over the following thirteen years to increase its share of final recovery of coalbed methane fuel from the San Juan Basin by an estimated 1.9 trillion cubic toes. BP spokesman Tony Hayward mentioned, This funding will enable us to proceed the accountable improvement of considered one of the largest fuel fields within the US.
It is sort of possible the unconventional fuel firms could flip round through the EIA-predicted strengthening in pure fuel pricing. Due to this fact, we are revisiting and extra closely monitoring developments in previously featured corporations with non-standard gas property. The more speculative coalbed methane (CBM) exploration and growth corporations seem to offer more leverage beneath this pricing local weather.
Calgary-based mostly EnCana (ECA) is the industry chief in unconventional pure fuel and built-in oil sands growth. As of December 31, 2006, the corporate had internet proved reserves of roughly 12.4 trillion cubic toes of natural gasoline.
Denver-based Delta Petroleum Company (DPTR) engages in exploration for, and the acquisition, growth, and production of natural gas and crude oil. Core areas of operation include the Gulf Coast and Rocky Mountain regions. What some believe could turn into a company-maker is the Columbia River Basin in eastern Washington. Delta has not too long ago divested non-core properties to narrow the corporate focus. Gulf Coast is about conventional oil and gas, while the Rocky Mountain focus is on non-typical tight gasoline sands.
The smaller, more speculative Alberta-centered coalbed methane corporations embody Ember Sources, Mahalo Energy and Rockyview Vitality. These have been among the toughest hit since a gas storage surplus was announced in June 2006. The collapse of the Amaranth hedge fund, a couple of months later in September, washed out a lot of the intense speculative curiosity within the sector. The loss of about $6 billion pure fuel futures in a single week deflated bullish traders. Also, the absence of a hurricane season in 2006 eliminated any urgency to rush into the nat gasoline sector.
Bottom fishers have been quietly accumulating waiting for the underlying commodity to regain momentum. We noticed corporations issuing positive news releases in late March, after initial cold weather had provided them with some share worth support.
On March 30th, Ember Resources (TSX: EBR) introduced an estimated of 257.Four Bcf of confirmed CBM gas resource. refinery petroleum Also in late March, Mahalo Vitality (TSX: CBM) sold off its non-core oil and gasoline assets to give attention to its CBM properties. Once more, in late March, Rockyview Power (TSX: RVE) announced it had drilled 28 wells in Albertas Horseshoe Canyon, and is in the technique of drilling another effectively within the Manville Formation. We found these Alberta, Canada CBM performs had been one method of gauging the direction of this sector.
Others which comply with the route of the Alberta CBM performs are three companies, targeted on CBM development in China. Weve featured these in the past because China is transitioning its energy combine. The nation is asking for a doubling of its pure gasoline consumption to 6 %, whereas reducing its dependency upon coal for electricity manufacturing. The Worldwide Energy Company indicates that Chinas gas demand by 2010 may reach a hundred billion cubic meters per yr.
Earlier this year, Far East Energy (FEEC) reported excessive gasoline content and permeability from its preliminary wells in the companys Shouyang Block in Chinas coal-rich Shanxi province. Cautious comparisons have been made to the potential of prolific wells found in Australias Fairview Field and the San Juan Basin in Colorado-New Mexico. One of many keys to CBM development is permeability, which allows the fuel to maneuver with greater ease by way of the coal formation and across longer distances to the well.
Pacific Asia China Power (PCEEF) has encountered comparable outcomes at shallow depths excessive fuel content material with permeability. It is anticipated to commence a three-effectively pilot-testing program on the companys Baotian-Qingshan CBM concession, recognized as the Guizhou mission. What separates this firm from so lots of the opposite oil and gas refinery equipment group speculative CBM performs is the cash cow presently being developed with its joint venture drilling subsidiary. In mid February, the company introduced it was awarded a contract with a unit of the worlds third largest coal producer in excess of $7 million. In essence, Pacific Asia China Vitality can also be heading down the highway of additionally becoming a drilling firm. The subsidiary has an unique in China for the Mitchell Drilling Dymaxion know-how.
Hong Kong-based Green Dragon Fuel (Goal: GDG) reported success drilling efforts in late January in each of the companys 5 CBM blocks in China. Forty-seven wells had been drilled in report time by the goal coal seams with 26 drill rigs working concurrently at the peak of the drilling. Green Dragon announced it would submit its most superior CBM block to the pertinent authorities by the tip of the current quarter to turn into its first ODP (Overall Improvement Program). Success in this effort would probably boost the others on this area.
Coalbed methane and different unconventional energy concepts play an integral function for the peak oil adherents. Abrupt climate change and international warming episodes have gotten extra frequent. It isn’t any surprise the cross we received in 2006 with the absence of extreme hurricane exercise was anomalous and unlikely to repeat this summer. The variety of pressure majeures in mining metals has crept larger in 2007 and never just the cyclone-induced mine flooding at Australias Period uranium mine.
Weve following unusual developments in the Arctic (and elsewhere) which are suggestive of extra climate change to come back. For example, Inuit elders are actually complaining of the elevated publicity to sunburn.
([http://www.globalwarming101.com/content material/view/750/] ) The most important increases in UV radiation occur in the spring, and this generation of Arctic dwellers may be uncovered to 30 percent extra UV radiation than their elders. Heat-trapping greenhouse gases may be warming up the North Pole at an accelerated rate.
With this in thoughts, the battle is on to cut back the amount of coal-burning in energy plants. The speedy logical solution is an elevated reliance on natural and unconventional gasoline. The sooner the political momentum swings to decreasing coal-fired plant growth, the sooner this could impression natural gasoline pricing. Under these circumstances, the unconventional gasoline companies, CBM and otherwise, should profit.
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