Wednesday, Part II -- June 10, 2015

IPs have been reported for wells coming off the confidential list today. Link here. Note how incredibly these wells are, and they are choked back and/or taken off-line a significant portion of the month. Also note the number of stages and the incredible amount of sand EOG is using for a simple long lateral.

Active rigs:

	6/10/2015	06/10/2014	06/10/2013	06/10/2012	06/10/2011
Active Rigs	82	190	187	213	169

RBN Energy: the evolution of the Asian LNG market.

As natural gas takes on an ever-expanding role in Asian energy markets, the traditional practice of sourcing liquefied natural gas (LNG) through long-term, “point-to-point” supply deals at oil-indexed prices is being challenged on several fronts.

For one, U.S. exporters are linking the price of their LNG to Henry Hub gas prices.

For another, Asian LNG customers, eager to reduce costs in a suddenly glutted LNG market, are working to renegotiate their oil-linked deals, and turning to the LNG spot market, where prices have been attractively low.

Fast-changing market dynamics include planned gas pipelines from Siberia to China that may well make the Asian LNG market more like Europe, where LNG competes head-to-head with piped-in gas and with coal. Today, we continue our look at the changing international market and what it means for U.S. and Canadian gas producers and LNG exports.

The future success of U.S. and Canadian shale producers exporting their gas in the form of liquefied natural gas (LNG) depends primarily on how competitive they can be on price. There are reasons to be optimistic, especially over the long term. After all, the U.S. and Canada have vast reserves of low-cost, accessible gas; good access to the three key markets (Asia, Europe and South America); and outstanding reputations as reliable trading partners.

But there’ll be a lot of competition out there—from LNG exporters in Qatar and Australia, and from Siberian gas producers, to name just three.

LNG also will need to compete with other forms of energy. For example, while China, India and other Asia nations (Japan among them) may want to shift from coal to gas as a primary power-generation fuel for the sake of public health and the environment, how much they’ll actually shift (and how much gas they’ll end up needing) will depend to a large degree on whether gas is an economically viable alternative.

What seems clear is that they want it to be, and that they’re doing everything they can to keep gas and LNG prices low and to reduce the price volatility that sometimes can be pretty scary.

The G-7 suggesting that the world's energy in 2100 will be 100% fossil-free will be something for my great-grandchildren to witness. Gonna be a lot of solar and wind farms in Japan, I guess. Or all nuclear.