Trib has today: Low natural gas prices no boon for shale. PG had related article yesterday: Shale gas affecting industry's pricing
Yet Forbes has this: Chesapeake Could Be $30 Stock, Shale Reserves Are Huge
Yin and Yang?
On the state of Pennsylvania policy on this, really worth a read is this from the (Towanda-Sayre) Daily Review: Sen. Yaw introduces Marcellus Shale legislation. Note the section on the proposal for the state to merely 'allow' localities to use value of reserves is calculating property value and property taxes. If the MSC was mad at the city of Pittsburgh, they must just hate anyone proposing anything like that.
Why would localities ever want property tax to reflect shale value? Well, it looks like some Pennsylvania counties are having a hard time even funding their state-mandated hazmat teams. No growing need for those I suppose.
Beyond PA wassup?
Industry exec in Dallas says: Natural gas prices' wild ride is over, Atmos Energy chairman says
Speaking of Dallas... everyone likes to tout how Fort Worth is an American city that allows drilling inside its city limits. Nobody ever mentions how much less dense Fort Worth is than say Pittsburgh. But what I didn't realize is that even if Fort Worth is ok with it all, Dallas isn't. Few mention that.
Marcellus drilling is extending into Maryland.
and while virtually nothing is impeding Marcellus Shale drilling in Pennsylvania, New York continues its virtually complete moratorium. Here is a quote in a Buffalo News story yesterday:
“It’s so frustrating, losing people to Pennsylvania,”Just to begin with. Think about that statement some next time you hear folks talk about the bad business climate in Pennsylvania. Is the economy in North Central PA booming compared to upstate New York? It's not quite obvious in unemployment stats. We will have to keep an eye out if any migration stats ever back that claim up. Do the movement into man-camps count though?
Speaking of Pennylvania and policy. Johnstown Tribune Democrat the other day: State officials are no-shows for Marcellus forum
Anyway... just doing my bit to keep the social media consultants employed.. if there are no blog comments on the whole Marcellus thing, the contracts may not continue. If you ask my thoughts on some of it, the price of natural gas is really the center of it all. And if you have been around long enough you know that few folks who claim to predict future energy prices ever ever get it right. Dire warnings of price escalation have been followed by price collapses and stable periods have seen spikes appear out of nowhere. The emergence of Marcellus Shale is itself just one small (or huge dependng on your perspective) datapoint in the unpredicability of energy markets. I used to love talking to the small energy derivatives desk at Lehman when I was there... then one day out of the blue they were all let go. Why? The energy markets in the very early 90's were so stable that it just wasn't an easy play to make money off of... especially when you had all these other fun new derivative markets exploding. Note the use of the term 'explode' probably changes in that context over the coming years.
In a sense there is a huge speculation going on in all energy development in that it depends. Here we are in the middle of a cold-enough winter and generally speaking natural gas prices are below the basement of the range of prices most natural gas developers were pitching to their investors. You would think something has to give.. Then you hear others say things like "Prices are at 15 year lows" with the implication they will rebound. Lots of money has been lost waiting for that reversion to the mean to eventually set in. The belief that prices will eventually have to revert to what their long term trend or pattern has been is the logic fundamentially that first did in LTCM, and later much of the CDO market.
For the intermediate term.. Natural gas is not quite like other commodities. I think I will agree with Duquesne's Kent Moors who has an article on "seeking alpha" where he points out that the issue is storing the gas.
Then there is coal.. gotta talk about coal. Later.