Australian (ASX) Stock Market Forum

Natural gas

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http://www.abc.net.au/news/newsitems/200608/s1724849.htm

At the risk of saying "I told you so", what I have said for some time is now happening. Australian domestic natural gas prices are on their way to world parity pricing, at a level well above present prices, whether anyone likes it or not.

In short, natural gas is going exactly the same way that oil did, albeit with the 30 - 40 year time lag that has characterised the oil versus gas industries for over a century.

As an investor there is obvious potential for profit or loss from this.

But for consumers and the country as a whole, it alarms me (to say the least) that state governments are aggressively pushing gas just as the sun is coming up to end the cheap gas party.

A new gas-fired power station in Queensland opened very recently. Two are about to be built in NSW. Victoria has a nice new gas-fired plant and they've built little else for the past decade. SA's power generation is dominated by gas, as is the NT. It's become a major fuel source in WA and even Tasmania has since late 2002 had an operating gas-fired power station.

How will this end? Exactly the same way as the mad rush in favour of oil for power generation in the 1960's and 70's. A financial and strategic millstone that will be around for decades.

Time for a sensible energy policy for Australia. One that doesn't involve relying on increasingly expensive oil and gas. :2twocents

While you and I may be able to pay an extra $1000 or so for power, what about the poor? Shiver in the dark? :mad:
 
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Smurf1976 said:
As an investor there is obvious potential for profit or loss from this.

how exactly?

I know Santos gets alot of its earnings from gas... (as opposed to oil)
 
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nizar said:
how exactly?

I know Santos gets alot of its earnings from gas... (as opposed to oil)
Profit. Direct exposure to any company producing natural gas for the WA domestic market or, ultimately, the Australian domestic market in general. PROVIDED THAT they don't have long term contracts in place for the sale of that gas at a set price. (Though if they have uncommitted reserves then they could sell these at a higher price in due course).

Longer term. Companies competing against natural gas as an energy source in the same market. For example, coal in WA and in the longer term any non-gas source of electricity practically anywhere in Australia (though I would keep clear of Queensland due to over capacity, long term contracts etc). This is a long term investment possibility however as it won't profit in the short term due to gas supply contracts being in place.

Loss. Any company using lots of gas where this forms a substantial part of total costs. Alumina industry comes immediately to mind.

I'm being very general here. The basic point being that Australian gas won't be sold domestically at a discount to the international price for much longer. And that international price has been rising and IMO will trend up over the long term. The existance of fixed price contracts can (and does) preclude most profit / loss opportunities in the short term outside of WA. A bit like seeing the potential of the internet in 1990 - someone ís going to make $$$ and others are going to lose eventually. :2twocents
 
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Smurf1976 said:
http://www.abc.net.au/news/newsitems/200608/s1724849.htm

At the risk of saying "I told you so", what I have said for some time is now happening. Australian domestic natural gas prices are on their way to world parity pricing, at a level well above present prices, whether anyone likes it or not.

In short, natural gas is going exactly the same way that oil did, albeit with the 30 - 40 year time lag that has characterised the oil versus gas industries for over a century.

As an investor there is obvious potential for profit or loss from this.

But for consumers and the country as a whole, it alarms me (to say the least) that state governments are aggressively pushing gas just as the sun is coming up to end the cheap gas party.

A new gas-fired power station in Queensland opened very recently. Two are about to be built in NSW. Victoria has a nice new gas-fired plant and they've built little else for the past decade. SA's power generation is dominated by gas, as is the NT. It's become a major fuel source in WA and even Tasmania has since late 2002 had an operating gas-fired power station.

How will this end? Exactly the same way as the mad rush in favour of oil for power generation in the 1960's and 70's. A financial and strategic millstone that will be around for decades.

Time for a sensible energy policy for Australia. One that doesn't involve relying on increasingly expensive oil and gas. :2twocents

While you and I may be able to pay an extra $1000 or so for power, what about the poor? Shiver in the dark? :mad:

Smurf I am interested in what you say. After spending the last year or so in the energy game I have learnt a few things about gas and electricity.

The guys I work for have a view that on the East Coast there is a large surplus of available gas for the next 10-15 years even considering a large increase in gas fired baseload generation. I do agree however that gas fired baseload generation does deplete gas reserves at a much larger rate than otherwise.

In this environment we expect east coast prices to rise only modestly. If they rise too far - generation projects will not get up.

Regarding new electricity generation - there seems to be a large policy move to go for gas because Australia has large reserves. The only other real option for baseload electricity is coal fired. But this seems to present a lot of political issues regarding greenhouse emissions and companies maybe baulking because of a potential carbon tax in the future.

My view is that for cheapest electricity we would be best served with coal fired - but this is not popular. Gas fired is the best for peaking generation as the cost of adding capacity is much cheaper and it will not deplete reserves significantly. But it is most likely some gas fired baseload generation will materialse because politically its easier and companies want to monetise dormant east coast gas.

The west coast is an interesting situation that because they have so much gas, the owners are shifting it overseas to LNG. Therefore they are in the situation that they will have to compete with LNG for domestic use - and given their very high use of gas this will be a sticky situation when new local contracts come up for renewal (price rises). However I think this situation is very different to the east coast situation.

Smurf - what would be your suggestions regarding new baseload electricity for the east coast, given that coal is very unpopular?

Cheers,
TJ
 
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I agree gas prices are unsustainably low. Ie, it will find new markets and uses (Transport, cogeneration, bottled gas, export to NZ, CNG,LNG, methanol,synthetic diesel,etc. Such projects are all on the private drawing boards. This means more used, prices rise, and margins for producers rise exponentially. Coal seam Methane companies are on tight margins, as these improve profitability will be leveraged strongly. MEL, AOE, MPO,ESG but a few. The big boys, STO,ORG,BHP,AGL etc are all into it too (but without such a potent leveraging)and likely to gobble up a few juniors along the way.
MEL and AOE looking for major news and developments over next quarter.
.
AOZ
 
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I beg to differ with sum of your apinions Smurf. Since the price of oil has risen Gas has came into a world of its own. Dispite the Americian way of life I think Gas has became a very important Commoditie here in Australia and the rest of the world. For me Gas looks to be a big player in the industry of fuels and resourses as buisnesses start to reshape and include the cheaper alternitive. Take ethonal for example, evryone wants sum.

Just Recently I have put three well Gased up stocks into my portfolio.
QGC- Queensland Gas, SGL- Sydney Gas, ESG- Eastern Star Gas. All three of these are well triggered, and look to break all previous boundry's. I dought they will look back for a long time.

Personaly I'm smokin with excitment, because gas has just came into the big pictiure. I have high regards and influence for GAS.

YERRHRRR GAS ME UP BABY! :bong: :p: :D
 
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StockyBailx said:
I beg to differ with sum of your apinions Smurf. Since the price of oil has risen Gas has came into a world of its own. Dispite the Americian way of life I think Gas has became a very important Commoditie here in Australia and the rest of the world. For me Gas looks to be a big player in the industry of fuels and resourses as buisnesses start to reshape and include the cheaper alternitive. Take ethonal for example, evryone wants sum.

Just Recently I have put three well Gased up stocks into my portfolio.
QGC- Queensland Gas, SGL- Sydney Gas, ESG- Eastern Star Gas. All three of these are well triggered, and look to break all previous boundry's. I dought they will look back for a long time.

Personaly I'm smokin with excitment, because gas has just came into the big pictiure. I have high regards and influence for GAS.

YERRHRRR GAS ME UP BABY! :bong: :p: :D

work on ure spelling. geez!
 

CanOz

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Natural Gas NG is an interesting contract...check these moves...:cautious:
 

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EIA expects the regular gasoline price will average $3.53 per gallon over the summer.The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014.

EIA expects the Henry Hub natural gas spot price, which averaged $2.75 per million British thermal units (MMBtu) in 2012, will average $3.80 per MMBtu in 2013 and $4.00 per MMBtu in 2014.

However these projections can change at any time due to new developments. Energy price forecasts are highly uncertain

My ideas are not a recommendation to either buy or sell any security,commodity or currency. Please do your own research prior to making any investment decisions
 

CanOz

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The Energy sector is in for some fun over the next decade. NG and CL have already "decoupled" and we should them continue to stay this way, according to Bloomberg's David Wilson:

By David Wilson
June 6 (Bloomberg) -- Cars, trucks, trains and ships will
increasingly run on natural gas after the fuel’s price broke a
traditional link with crude oil, according to Edward L. Morse,
Citigroup Inc.’s head of global commodities research.
As the CHART OF THE DAY shows, the price of gas for
immediate delivery dropped 32 percent at the Henry Hub in Erath,
Louisiana, since 2010. The hub is the delivery point for futures
contracts traded in New York. Oil has risen 18 percent, based on
the spot price for West Texas Intermediate crude.
“Overwhelming economic incentives” exist to take
advantage of the price break, Morse and seven colleagues wrote
in a report two days ago. Gas costs about 75 percent less than
oil for the same amount of energy, based on the Henry Hub and
West Texas prices yesterday.
The changing relationship between the prices were among
four trends that Morse, based in New York, and colleagues cited
as reasons to anticipate more use of gas in transportation. The
others are accelerating growth in global supplies, governments’
leeway to hold down prices, and environmental benefits when
compared with using oil products.
Switching to gas from oil may reduce the demand for crude
by as much as 1.8 million barrels a day by 2020, according to
the report. This is about 5 percent of what’s now used for
transportation fuel.
“The adoption of natural gas as a fuel could follow an S-
curve,” in which the use accelerates as more consumers make the
transition, the report said. This would follow precedents set in
moves to diesel from gasoline for heavy-duty trucks and to
diesel and electricity from steam for locomotives.

For Related News and Information:
North American gas spot price monitor: BGAS <GO>
Worldwide crude spot price monitor: BOIL <GO>
Energy-related top stories: TOP NRG <GO>
Charts, graphs home page: CHART <GO>

--Editors: Michael P. Regan, Lynn Thomasson

To contact the reporter on this story:
David Wilson in New York at +1-212-617-2248 or
dwilson@bloomberg.net

To contact the editor responsible for this story:
Chris Nagi at +1-212-617-2179 or
chrisnagi@bloomberg.net
 

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MCX Natural Gas jun expiry future last closed at 233.7 with gains of 5 rupee+. In intraday MCX Natural Gas future made high near 234 while low was near 229. Total 5 rupee range and continues strong rally. Here buy near support 228 with stoploss and expect 238+ level as target on upside.
 

CanOz

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Traders on another forum have been raving about the this volatility!
 

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Here we go....

http://www.news.com.au/finance/busi...es-gas-shortfall/story-e6frfkur-1227376735830

AUSTRALIA'S east coast is facing a potential gas shortfall of 155 petajoules of gas by 2019

To put that into perspective, 155PJ is about the same as the entire consumption of NSW. Or to put it another way, it's about the same size as the residential market in all states combined or the entire consumption (all uses) of SA, NT and Tas combined. So it's a significant amount of gas. :2twocents
 
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Current Natural Gas trade:
Every now and then you find your self in a trade that starts well then stalls. This NG trade has been interesting as it been mostly in profit and looking likely to be stopped out twice.

Looking at the daily chart, we knew that any move up would likely be choppy as it's a corrective move (after the impulsive move down). Generally I avoid getting into corrective moves unless I think it's almost over. However I'm in this trade and have to manage it as well as I can.

The 4H chart shows the price volatility.

Price has traded at T1, but I want more (at least T1.5 at 2.75). I've raised the stop to 2.62 but raising it again might be tricky with the current volatility. With these types of trades, we have to grin and bear it whatever happens.
PIC37.PNG pic38.PNG

Note: Try to trade the anticipated impulsive swing rather than the corrective move. This way your trade will quickly fail or start well.
 
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Nat gas trade closed when price spiked higher after the weekly nat gas report. I placed the sell order itm before the report hoping for this exit. Price could have spiked down and taken me out also. Price has been volatile (like most market atm) and not going up as fast as I like. Result +1R.
ng103.PNG
 
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Just a note to mention that I've re-entered the NG market.
Bought at 2.720, iSL 2.670, TR = $500USD.

I was drawn to the re-entry after seeing the pull-back produce another higher low. Price is grinding higher and my original target is still in play. As the trade has started well, I've raised the exit stop a little. I've placed sell limit orders just below 2.80.
ng0703.PNG
 
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Nat gas trade #2 has been closed.
Price got within 0.006 ($60) of my limit sell order (2.799), so I shoved the exit stop closer. Price fell as the US session started and took me out at 2.765. Result + 0.9R.
The two NG trades earned ~1.2% over two weeks.

Why monitor this trade closer than normal.
(i) price was very close to my limit sell order which was right under a round number (2.80).
(ii) Nat gas storage report out in a few hours. This report can move the price quickly. Don't want to be caught out. This report is a weekly scheduled event so traders can be ready. The crude oil inventory report is also released weekly, one day earlier than this one.

The initial SL was kept wide due to the recent volatility.
ng0803.PNG
 
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