Sunday, December 19, 2010

Shale Gas Watch

I always look forward to Chesapeake's investor presentations (Dec 2010 Link), there's always some good insight to the world of shale gas. These presentations are chocked full of data and I found the table on page 14 instructive:It shows that you really have to keep a lot of rigs working to stay in the shale gas business, i.e. one in five gas rigs in the U.S. is a Chesapeake rig. Next, the data on page 15 shows the Chesapeake has tripled it's rigs drilling for liquids because $4/MMBTU gas at Henry Hub won't pay the bills.

Page 21 presents a graphic declaring "de-emphasizing natural gas"

I relate this info to make the point that the shale gas business is not risk free or cost free and I don't think shale gas can be produced at a cost that threatens the Alaska Gas Pipeline. I'm still a firm believer that the biggest threat to the Gas Line is long term tax rate uncertainty.

No comments: