Natural gas says bye to $10 for 'foreseeable future' (LNG Looking for Buyers)

I've had a few emails wondering why I haven't written more about wind. It's all about cost of production.
Natural gas futures were recently trading at$3.688 down $0.044.

From MarketWatch:

Natural-gas prices have had quite an unimpressive run in the last six months and the situation may get worse despite the steep declines in overall drilling and production.

Futures prices for natural gas have been trading at their lowest levels since late 2002, most recently below $4 per million British-thermal-unit level on the New York Mercantile Exchange.

It was a totally different story about a year ago, when cold weather drove prices to highs around $9.

"High prices last year pushed U.S. exploration to record levels," said James Williams, an economist at WTRG Economics. "That increased production capacity."

And the "high capacity, weaker demand due to recession and lower oil prices caused [natural gas] prices to collapse," he explained.

Indeed, weak global economies are to blame, but only in part.

The U.S. Energy Department expects the nation's natural-gas consumption to decline by 1.3% in 2009, according to the government's energy outlook report released last month.

"There is plenty of gas available in the U.S. right now, as well as worldwide," said Charles Perry, president of energy-consulting firm Perry Management. "Supplies are plentiful and storage is high so there is little, if any, upside pressure on gas prices now.">>>MORE

From Morgan Energy, Feb. 27:

Will A LNG Flood Lead To The Collapse Of Natural Gas Prices?

More LNG imports are likely to result in depressed US natural gas prices

As every investor knows, in any business, timing is crucial. And by that measure, the timing of many multi‐billion dollar infrastructure investments in LNG processing, transport and receiving schemes appears to be badly off.

In the early 2000, the conventional wisdom was that the US domestic production capacity was on the decline requiring massive imports of liquefied natural gas (LNG) from overseas. With natural gas prices at all‐time highs and projected to go even higher, a number of multi‐national giants began massive investments in export and receiving terminals and specialized tankers that can transport the liquefied fuel from producing countries to major markets in the Pacific Rim, Europe, the east coast of the US and the Gulf of Mexico....MORE

HT: Knowledge Problem

From Bloomberg Apr. 3:

Japan’s LNG Imports Slump; Cargoes Head to U.S., EU

The number of liquefied natural gas tankers sailing to Japan, the world’s biggest buyer of the fuel, fell 47 percent in the past two weeks as the recession cut demand from power producers.

Eighteen LNG vessels are traveling to Japan, down from 34 two weeks ago, according to AISLive ship-tracking data compiled by Bloomberg.

“You’re beginning to see adjustments being made with the fall in demand in Asia and extra LNG becoming available,” Andy Flower, an independent consultant and a former executive at BP Plc’s LNG unit, said by phone. Japanese buyers are “exercising some downward flexibility in their long-term contracts.”

While the data is only a snapshot and may exaggerate the drop in shipments, Japanese imports may decline as new long-term contracts started April 1, Flower said.

The number of tankers sailing to the U.S. doubled to four in two weeks, AISLive data show.

The U.S. may receive as much as 1 billion cubic feet of gas a day in April in the form of LNG, Flower said, citing data from Houston-based consultants Waterborne Energy Inc....MORE

From the Grand Junction Sentinel:

Imports of liquefied natural gas could send price down more, Denver gas broker says

An expansion of liquefied natural gas imports could drive down prices further this year, a Denver gas broker says.

That would bode poorly for western Colorado, where John Harpole, president of Mercator Energy, said drilling rig numbers already have dropped 71 percent in the past six months.

Speaking at the Club 20 spring meeting Saturday, Harpole said a 30 percent increase in liquefied natural gas capacity is coming online.

That gas can be transported by ship rather than pipeline. If imports of it increase enough, the price of natural gas could fall later this year to $1.50 per million British thermal units, about one-fourth of what it was a year ago, Harpole said.

Harpole said some of that gas would come from countries that otherwise would be forced to dispose of excess gas by flaring it off.

“By capturing it and selling it, at least they’re making something on that gas,” Harpole said.

Already, Harpole said, drilling activity in western Colorado has been hampered by factors such as limited pipeline capacity and uncertainty surrounding the state’s new oil and gas regulations.

Problems such as pipeline capacity eventually will go away, but Harpole said the new regulations will be permanent....MORE