>Coal: Cheap gas has arguably been a bigger coal killer over the past decade than “ESG” or regulation. As the most directly substitutable fuel in power generation, higher natural gas prices make coal more competitive.
This is the most underrated part of the article. Coal wasn't killed by ESG, it was killed by nat gas. I'm heavily positioned into Australian coal producers for the coming year.
Hello there, any chance that you can write a follow up piece to this article? With Henry Hub prices around $2 and dropping, I think you should. I'm not trying to rub this in. We all make mistakes. When data changes, our strategies should change as well.
The temporary high in NG that we saw in 2022 in hindsight was not because of a new permanent high demand. We are constrained by LNG export capacity after all. So was it just pure speculation?
I'm reading a lot more articles now from oil producers in the Permian like PXD that say their gas/oil ratio keeps going up. If we don't have pipeline capacity, the HH price will continue to be low. But other places in the US like New England continue to have high strip prices.
Given that most hedging is done using HH, this is a big problem for producers outside of Permian like EQT or AR in Appalachia.
You missed one part of the natural gas/coal dynamic. In the past when there were a lot of power plants that can burn either gas or coal. If natural gas prices were high, those plants can switch to coal. A lot of those power plants have been phased out since natural gas has been so cheap for so long.
Now that natural gas prices are high, the power plants cannot switch to burning coal. They're stuck to continue burning natural gas and keeping demand high.
This is a great piece on LNG expansion. You mention EQT for Marcellus operations. Can you recommend a resource I can look into for explorers and gas miners in the other major basins like Permian, Haynesville etc.? Always appreciate these in-depth, knowledgable articles about energy and thanks for indulding us with your expertise.
My thinking is the momentum will just get carried and continue massively in 2023 - 2025 at least. The energy issues in EU are just too big. The only huge thing that can bring this down is massive demand destruction - probably also more psychological than real if we are talking about equity pricing and revenue / cash flow.
Natural gas storage inventory is trending at the low end of the 5 year trend just as we are entering the winter months. Historically we produce and build inventory during the summer then deplete those reserves in the winter. We are behind the average. Check out the Weekly Natural Gas Storage report.
>Coal: Cheap gas has arguably been a bigger coal killer over the past decade than “ESG” or regulation. As the most directly substitutable fuel in power generation, higher natural gas prices make coal more competitive.
This is the most underrated part of the article. Coal wasn't killed by ESG, it was killed by nat gas. I'm heavily positioned into Australian coal producers for the coming year.
One of the best quality Substack out there!
Superb piece - thanks for the education.
Another great one
Hello there, any chance that you can write a follow up piece to this article? With Henry Hub prices around $2 and dropping, I think you should. I'm not trying to rub this in. We all make mistakes. When data changes, our strategies should change as well.
The temporary high in NG that we saw in 2022 in hindsight was not because of a new permanent high demand. We are constrained by LNG export capacity after all. So was it just pure speculation?
I'm reading a lot more articles now from oil producers in the Permian like PXD that say their gas/oil ratio keeps going up. If we don't have pipeline capacity, the HH price will continue to be low. But other places in the US like New England continue to have high strip prices.
Given that most hedging is done using HH, this is a big problem for producers outside of Permian like EQT or AR in Appalachia.
You missed one part of the natural gas/coal dynamic. In the past when there were a lot of power plants that can burn either gas or coal. If natural gas prices were high, those plants can switch to coal. A lot of those power plants have been phased out since natural gas has been so cheap for so long.
Now that natural gas prices are high, the power plants cannot switch to burning coal. They're stuck to continue burning natural gas and keeping demand high.
Oil&Gas drilling and service cos should become the member of the winning team as well.
This is a great piece on LNG expansion. You mention EQT for Marcellus operations. Can you recommend a resource I can look into for explorers and gas miners in the other major basins like Permian, Haynesville etc.? Always appreciate these in-depth, knowledgable articles about energy and thanks for indulding us with your expertise.
My thinking is the momentum will just get carried and continue massively in 2023 - 2025 at least. The energy issues in EU are just too big. The only huge thing that can bring this down is massive demand destruction - probably also more psychological than real if we are talking about equity pricing and revenue / cash flow.
Whenever I see TLBS, I click. Great article once again!
Do you have any links for footnote 8? Interested in learning more details about that dynamic.
Natural gas storage inventory is trending at the low end of the 5 year trend just as we are entering the winter months. Historically we produce and build inventory during the summer then deplete those reserves in the winter. We are behind the average. Check out the Weekly Natural Gas Storage report.
https://ir.eia.gov/ngs/ngs.html