Any thoughts on the future price or market of natural gas?

[Blake Hampton]

Seems that the price of natural gas has been collapsing recently due to a milder winter in Europe. Was just wondering if anyone had any thoughts on the subject.

[mattee2264]

I'm more invested in American natural gas producers e.g. EQT, Antero, Range and bought summer 2020 so made hay although have given up quite a lot of those gains over the last six months. Weather hasn't helped and there is oversupply although not to the same degree as in Europe. And then you have a recession to worry about. So I wouldn't say the outlook is great. 

 

 

[thepupil]

on both the way up, and the way down, I try to focus further out on the curve as very near term spot is so volatile.

 

The whole curve is volatile of course, but for example NG12 is at $3.75 down from a high of $6 in Q32022. from 2018 to 2028 it bounced b/w $2.5-$3.0.

 

NG1 on the other hand is at $2 down from $10. It's been as low as $1.50 in 2020 and got to $10 at peak "Europe will freeze" 2022. If you look at NG12 you see we're about 1/3 off the highs whereas NG1 80% so you'd draw different conclusions from those. 

 

despite having a fair bit of my net worth tied to the future price of natty, I don't really have any deep thoughts on the subject. I think natty is an essential resource and a tremendous advantage held but the US of A in terms of access/infrastructure/system which encourages (despite dems best efforts) our exploitation of said resource and as part of my long term plan to protect against inflation i own BSM/DMLP which allows me to participate in unlevered royalty form. I can't tell you if it will be $2,$4, or $6. 

 

 

[CorpRaider]

I've been thinking I should sort of hedge my natural gas utility bill with BSM.  At least until I can convert to electric appliances and heat pump.  I never liked having gas in the home because of the risk of silent asphyxiation of my whole family, explosions, and inability to diversify feed stock/source, but I've been overruled so far by my boss.

Edited February 22, 2023 by CorpRaider

[Castanza]

17 minutes ago, CorpRaider said:

I've been thinking I should sort of hedge my natural gas utility bill with BSM.  At least until I can convert to electric appliances and heat pump.  I never liked having gas in the home because of the risk of silent asphyxiation of my whole family, explosions, and inability to diversify feed stock/source, but I've been overruled so far by my boss.

 

FWIW houses that have gas appliances vs electric are less likely to have a fire. Most fires start in the kitchen. I was looking at this some time ago because I converted pretty much everything to gas except my old water heater that I will probably switch to a heat pump at some point. But it was something like electric stoves are 2.6x more likely to cause a fire than a gas stove. I do have to say cooking on gas > electric. That being said, my wife is always paranoid we left the stove on or something. 

 

https://www.nfpa.org//-/media/Files/News-and-Research/Fire-statistics-and-reports/US-Fire-Problem/Fire-causes/oscooking.pdf

Edited February 22, 2023 by Castanza

[CorpRaider]

It's the explosion and silent death that worries me but mostly the exposure to one volatile source.  Always a little paranoid about a leak after our neighbors had one and we had to be evacuated for a bit.  I have good smoke detectors.

Edited February 22, 2023 by CorpRaider

[aws]

March NG dropped under $2 today while this spring NG futures are 20-25% higher. I've seen this a few times where shoulder season NG trades higher than the winter and it's never really made sense to me. I would assume the logic is that the weather has dragged down the price in the short-term, and then you might expect longer term the balances to tighten and lead to higher prices. But no matter how weak the demand is right now, it's still going to be something like 10bcf per day coming out of storage, and no matter how tight the balances are in a couple of months there will be 10bcf per day of net inflows. So people are selling gas now when it's needed most at rock bottom prices to buy it back in spring at a higher price. There's probably a reason for it, beyond simply calling it manipulation, but I don't get it.

Edited February 22, 2023 by aws

[Castanza]

22 minutes ago, CorpRaider said:

It's the explosion and silent death that worries me but mostly the exposure to one volatile source.  Always a little paranoid about a leak after our neighbors had one and we had to be evacuated for a bit.  I have good smoke detectors.

 

Yeah definitely a concern; especially if you have young kids who could turn the knob on the stove or something. 

[Castanza]

10 minutes ago, KCLarkin said:

 

I guess likelihood of an electrical problem going undetected is much higher so it leads to bigger fires.. We are in the process of replacing a gas range with induction and we had frequent small fires caused by the open flame on gas range.

 

We have three small kids and induction is a much better choice. Within seconds of turning off the burner you can touch the glass top without burning. I was never comfortable letting kids cook on gas, let alone unsupervised. But now my oldest can cook alone.

 

Haven't noticed a big difference in cooking. Induction results in more even cooking and is able to boil water much better than gas. Gas smells funny. Induction can make a small noise. Induction much easier to clean. Gas oven always had a problem igniting. The only real benefit I see from gas is the visible flame makes it easy to see which burner is on. Also a bit worried about scratching or cracking the glass top.

 

I'd say with kids induction is much better than gas. And without kids, I'd still prefer induction.

 

Induction is definitely a solid choice. A lot of chefs are making the switch depending on their cook style. I have an induction cook plate I use for steaks to get a good seer. You can definitely be more precise. Comes down to personal preference though. Downsides of induction are you can't move the pot or pan around. You cant "toss stuff" over heat etc. I haven't really ever noticed a smell using gas. If you have a proper hood over your oven/stovetop there shouldn't really be an issue. 

 

 

[rkbabang]

2 hours ago, Castanza said:

 

FWIW houses that have gas appliances vs electric are less likely to have a fire. Most fires start in the kitchen. I was looking at this some time ago because I converted pretty much everything to gas except my old water heater that I will probably switch to a heat pump at some point. But it was something like electric stoves are 2.6x more likely to cause a fire than a gas stove. I do have to say cooking on gas > electric. That being said, my wife is always paranoid we left the stove on or something. 

 

https://www.nfpa.org//-/media/Files/News-and-Research/Fire-statistics-and-reports/US-Fire-Problem/Fire-causes/oscooking.pdf

 

 

induction > gas > electric.  I switched to induction ranges and will never go back.  You get the same instant control you get on gas with quicker more powerful heating.  And nothing gets hot except the pan.  If a little kid turns on a  burner which has no pan on it nothing happens.

 

[LC]

Restaurants moving to induction more for the safety-related benefits (less stringent safety measures required)

 

I've used both but prefer gas for sauces, sautés, and most protein cooking (aside from perhaps searing steak on a cast iron). But I also am biased because I have copper cookware which sadly doesn't work on induction ranges.

 

Nothing boils water faster than induction, though.

[fareastwarriors]

I think I need to see more induction wok cooking before I am willing to switch. 

[Castanza]

Looks like we need a "What Are You Cooking" thread. Sorry for the derailments lol I'll see myself out 

 

 

[CorpRaider]

haha!  I was halfway trolling and look at us now.

[rkbabang]

Since no one can predict the price of natural gas (that being the topic) we might as well talk about cooking.  

 

Wok cooking would be a downside to induction, but I never use a wok and don't own one.  I have all induction compatible pans with flat bottoms.

 

The only gas exposure I have in my portfolio is WMB.   I've owned it for a few years and it pays a nice dividend 5.8% at it's current price, but my cost basis is $24 so 7.3% on my initial investment.

 

[KJP]

Here's BSM's management's take:

 

Monroe Helm

Okay. One another maybe when you were setting your most recent distribution increase, did you take -- how seriously did you consider an environment where we might have $2 to $2.50 gas for some extended period of time?

 

Tom Carter

Well, I think we believe and took into account that '23 and '24 and maybe some into '25 that will be challenging for natural gas markets. Everyone I mean as we've all looked out over the last 5 years, I think it's a general consensus in the industry that until some of these newer LNG export facilities come online, there's going to be a lull in growth of natural gas because it's the production has gone up and the prices that were in existence last year really saw some increases in activity. We think it's going to be a period of time where we don't see that much growth but we're well hedged and we have agreements that we don't think our operators are going to be highly volatile in their well count.

Edited February 22, 2023 by KJP