Post by
cender on May 30, 2014 8:03pm
ng prices next winter/ shale oil,gas pricing pressure
With all the shale gas wells in 2013 producing at record levels they could only add 2400 bcf to storage. We start this season at 800 bcf in storage, say we have another record production year at 2600 bcf added to storage ... that leaves us with 3400 bcf going into winter 2014/2015 - an extremely low level . This latest record winter draw of 3100 bcf most likely wont be repeated but a 2800 draw is possible . So it really comes down to the shale gas and if they can keep up record production levels ,I am starting to have my doubts .
Very few of the shale plays are actually making money even with huge initial production levels and the cost to drill is enormous - $7 million per horizontal well. Shale oil and gas accounts for 4 million barrels per day of u.s production , so almost half the total . Debt is starting to drown some of these companies as revenue cannot keep pace ,many have debt twice the amount of yearly revenue - spyglass looks like a dream compared to many of them . Given these dynamics, going forward the price of natural gas and oil must rise or many of the shale plays will simply be forced to stop producing as the drillers run out of other peoples money. It seems much more likely that oil and gas continue the price march higher so that we dont have mass bankruptcies in the shale arena . It makes for an interesting year ahead for SGL,LTS,BNP that have much cheaper drilling costs . Spyglass has fixable problems at todays prices , many shale drillers do not.