Tuesday Morning Links, News, And Views

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Market futures: Dow up nicely; oil up slightly. Libyan ports closed again. 

Active rigs in North Dakota: 183 (flat)

RBN Energy: update on the glut of Alberta, Canada, natural gas.

Alberta’s gas reserves are enormous: an estimated 33 Tcf of conventional gas, up to 500 Tcf of coal-bed methane gas, and up to 1,291 Tcf of shale gas, though it remains to be seen how much of that unconventional gas can be economically produced. Alberta accounts for more than 70% of Canada’s gas production, and more than 90% of Alberta’s gas comes from vertical wells. That is expected to change as the major shale plays in the province shift from exploration to production, but decisions on investing billions of dollars in unconventional gas production, new pipelines and the like will hinge on finding markets for that gas.

...  All seemed to be going reasonably well for Alberta gas producers until the shale-gas revolution. Over the past five years, however, more and more gas buyers in the traditional markets for Alberta gas have switched to U.S. shale gas supplies--from the Marcellus and Utica plays in particular--and several new pipelines now under development will give U.S. producers enhanced access to those consumers....

the changing dynamics of the North American gas market—and changes in TransCanada gas-transportation pricing—have made Alberta gas the odd man out. Another way to put it is, even at the relatively low spot prices for Alberta gas, it makes more sense to store gas in-province than it does to flow it through the Mainline.

Of course, something would have to give if, as seems possible for the first time in decades, Alberta’s gas-storage facilities—estimated to have the capacity to store as much as 400 Bcf--are filled to the brim in the next few weeks. That storage max-out probably won’t happen, but even the thought of it has gas producers tracking the market very closely.

If there is literally no more in-province storage capacity left, Alberta gas prices would need to plummet to move gas to the east and/or producers hedged the least and exposed the most to fluctuating spot prices would need to consider “shutting in”—that is, suspending gas production at some wells to ratchet Alberta’s gas grid back into balance.

So, will we be seeing stories of natural gas storage maxing out in Alberta by the end of the summer? Stay tuned.

WSJ Links

There was almost nothing in today's edition that is worth posting, linking, or talking about. Even the opinion page was pretty barren.

There was a primer for Caroline Kennedy, the president's choice for US ambassador to Japan. Does anyone really care? By the time she gets settled in, it will be 2014 and by 2016 she will be packing her bags. She won't be the first inept celebrity ambassador and she won't be the last. She will be a novelty at Japanese cocktail parties. This is simply resume-building for Ms Kennedy, after her dismal showing running for public office.

On another note, I don't know if I read this correctly, but a news article said with the recent improvement in the US economy, the US debt is back near 4% of the nation's GDP (last week Bloomberg said under 6%).  According to the Wall Street Journal, Japan's debt is nearly 240% of GDP (no typo). Here's the link:

Supporters of the higher tax, though, will point to the details of the latest GDP data, especially the 3.1% annualized growth in private consumption. Some of Mr. Abe's closest advisers, including Japan's finance minister and central bank governor, say raising the consumption tax is essential to shore up public finances as Japan's total public debt nears 240% of GDP. The central bank has signaled that fiscal tightening is a prerequisite for even looser monetary policy.

The real question: is Japan too big to fail? Would Japan meet the criteria necessary to join the EU?