Natural Gas - 2021 rise is unescapableThe producers of natural gas are deeply discounted from the 2014 slide and the complete meltdown of 2020 pandemic.
We will see the results of dramtically improved prices starting in 2021 Q1:
1) US LNG continues to have strong exports as Asia & Europe are desperate for LNG due to the cold winter and empty storage
2) Europes largest Nat Gas field is depleted and is closing the Netherlands due to ground tremor and order of government
3) Nordstream 2 is delayed (1.5 years and running) as US increases sanctions to anyone participating. Germany has no additional sources other than LNG
4) US LNG is not 14% of production... and another 2 BCF/day should come online in 2021 adding another 2% in demand
5) Alberta's Nat Gas price has decoupled from Henry Hub due to current significant demand... I'm hoping our storage is low in Alberta at the end of withdrawl season.
6) Storage in the US will flip to below the 5 year average and we are likely to see the storage at the end of withdrawl season (end of March) approx 250-350 BCF below that 5 year average.
7) The US drill rigs for nat gas and oil (associated gas) remain stubornly below last year at 17% and 56%. About 25% - 35% of the gas produced comes from associated gas from oil wells
8) The DUC's are being converted at a rate of about 400 wells/month and the ducs are coiming down. But we are a long way from the 1000-1200 wells being completed per month that we saw in 2019. Hence the rapidly depleting shales wells will continue to exceed the ability of new wells to change the trajectory of declining production in 2021. We are not likely to see a positive increasinging production in Nat Gas until Q2 of 2022.
The die is cast... the gas shortage of 2021-22 winter is already mixed into the recipe... just need to bake the cake and hope for a normal winter in 2021-22.