Another great quarterly report from the Goehring & Rozencwajg firm - this time pointing out that natural gas production actually fell this year. Against this my morning coffee headline scan shows Energy Transfer saying they have requests to connect 16 bcf/d of new gas demand for data centers and so forth, and Targa forecasting a 20 bcf/d increase in US gas demand by 2030. So if you use Targa's outlook, a 20% increase in demand in 5 years on the back of falling supply and negative prices this year. And Targa is forcasting only 7 bcf/d or so of this can come from the Permian.
Either the laws of how prices work when demand is higher than supply have been repealed this year or we're in for a very exciting last half of the decade. I'm bullish nat gas for sure. But what is good news for gas has historically not been so great for everyone else. What I do know, is that the term data driven is meaningless - if we don't like the "data" we just change it, ignore it, or argue that it's wrong. Each to his or her own viewpoint - I believe people who have their own money in the game. E&P is being handed a tremendous supply opportunity - but they have some catchin' up to do to get that growth engine moving again.
And yes, I got gold. Everything I read about what's coming up next year says "inflation". Creating a new Department on top of all the other Departments to cut spending doesn't exactly scream budget cuts to me. And no, I don't think that the alternative would have changed the view that we're trying hard to replace Argentina as the poster child for inflation. Many of us are old enough to have seen this movie before. Mike's right - time to go fishing.
https://www.gorozen.com/commentaries/2q2024
At the risk of Mike getting pissed off .
USA =United States of Amnesia --- Gore Vidal ( I have posted this several times earlier ) .
Now a new definition for '' Democracy ''
'' As sex culty philosopher Osho said, I think about America, “Democracy basically means government by the people, of the people, for the people. But the people are retarded.”😂
Thanks for this Anne. I really enjoy the G &R letters.
Personally I am seeing more interest in NG in the Permian. It is too early to tell if the interest will translate into activity. But an independent operator and a COP manager told me a couple of weeks ago that NG is back and they are looking. And they are looking at one of my deals. We shall see.
I am a big fan of Scott Lapierre's work and he is is pretty adament about a hard stop at bubble point. And other engineers I respect are solidly in Scott's camp.
If G & R are correct on production declines , several people I know insist that refracs are the answer. And I have no doubt many operators will jump on that bike to see how far it will go, especially in the Barnett but I am dubious.
Rune Likvern's opinion is the one I would value the most on this topic. It would be really nice to hear his voice again.
The shale gas sector will say decline in natural gas production is price imposed, rig counts are down and curtailments are clear. It will then say it can ramp on quickly again, with the right price. I've played this game myself over the years and I believe it to be true, particularly with the quick investment cycle of shale gas. I do not believe depletion is the reason for shale gas production declines, though it is clear that EUR's are in decline in the APP Basin, for sure.
Maybe for all the reasons you and the article mention we can drill baby, drill gas and actually use the stuff. Maybe there is so much of it we can keep prices low in the US, render the US competitive from an industrial standpoint with cheap natgas, and export it too. But you are right, it will be inflationary. You will forgive me if I do not invest in anything long term with regard to the Permian Basin, oil wise or associated gas wise.
The gentleman from Florida has his hands full with regards to deliverying on energy promises.
It is a tragedy for a man to be ahead of his time . --- Matt Simmons ( I recall , but could be wrong)