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North American Natural Gas Markets

North American Natural Gas Markets. July 15 th 2009 J. Cameron Bailey CFA President and Chief Executive Officer. Historical Decline Rates. US Production Declining by 35% per annum = 19.6 bcf/d. The Math – US Production. The Math – US Production. Natural Gas Directed Rig Count.

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North American Natural Gas Markets

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  1. North American Natural Gas Markets July 15th 2009 J. Cameron Bailey CFA President and Chief Executive Officer

  2. Historical Decline Rates US Production Declining by 35% per annum = 19.6 bcf/d

  3. The Math – US Production Acquire and Exploit

  4. The Math – US Production Acquire and Exploit

  5. Natural Gas Directed Rig Count The drop in rig count will soon have a greater impact on production We estimate up to a six month delay of well drilling top producing a well. Source: Baker Hughes

  6. US Natural Gas Production - Declining USProduction Source: Bentek

  7. Canadian Gas Drilling Rig Count Lowest levels witnessed in 10 years Acquire and Exploit

  8. Canadian Gas Production Canadian gas production is declining leaving less for exports to the US Acquire and Exploit

  9. US Wellhead Prices vs US Natural Gas Rig Count Acquire and Exploit

  10. The Growing US Supply Deficit

  11. Forecast Gas Storage Levels – 700 Rigs Operating 2.7 TCF Storage Acquire and Exploit

  12. Natural Gas - Investment Cycle Concept Land Acquisition Permits Rig Count – Baker Hughes Rig Count Completions Pipeline Construction & Tie-in Production – Daily Estimates Six Months? Acquire and Exploit

  13. Delayed Production Response – Natural Gas Drilling Activity in Texas New well permits are down 73% but there still remained an inventory of Barnett Shale wells to complete Acquire and Exploit

  14. Shale Gas Plays – Texas Barnett Shale • 10,539 Wells on Production since 2004 • 21% of Texas production • 2008 Drilling Permits issued were 4,145 representing 75% of all drilling activity in Texas • Well permits have decreased 73% YOY • Texas Production represents 33% of US total production. Acquire and Exploit

  15. Texas - Monthly Natural Gas Production Acquire and Exploit

  16. Total US Demand Demand more affected by weather than the economy Source: Bentek

  17. Recession and Demand? – Industrial Demand Industrial demand is off 1.3 bcf/d which is 2.7% of total demand Acquire and Exploit

  18. Recession and Demand? – Power Demand The loss of Industrial demand has been more than made up by the increase in Power demand Acquire and Exploit

  19. LNG and Canadian Imports Acquire and Exploit

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