1. Likely better pricing than 2009 - $6-$8 natural gas price needed to make shale gas discoveries economic although certain parts of the plays can be produced below this level. It is this fact that continues to create a widening supply demand gap in the short term and may keep prices down longer, but clean burning characteristics of the fuel will eventually push the price to level required to maximize its development and generate huge investment in infrastrucure to get the product to the end user markets..
2. Volatility in gas prices to remain at least through mid year due to fluctuations in LNG inflows, uncertain timing for industrial and electricity demand recovery, continued production growth as each new shale well adds significantly more reserve and politcal uncertainty as to the direction of new legislation impacting the price of alternative fuels after subsidies/incentives.
2. Continued price divergence between natural gas and oil (oil historically 6-10 times natural gas price --- today multiple is 15-20 times -- increasing oil demand in developing countries likely to push crude oil prices higher and although gas prices will rise over the next few years this multiple will likely widen at least in the next few years.
3. Uncertain timing of price recover for natural gas, as supply continues to exceed demand with equilibrium notlikely to occur until 2011 or 2012 without a fundamental market change(new demand, favorably legislation, etc.). If true, what will the price be as the supply/demand gap narrows?
4. Natural gas demand tied to industrial recovery, growth in share of electricity market and level of success in creating transportation or other market demand for the product.
5. Will cap & trade occur in 2010? Ever? If not, what will replace it? Which power sources gain? wich lose? --- Natural Gas seems to have many advantages, but political climate pushing investment dollars to renewable energy
6. Other questions include will clean coal technology be developed economiclly? Will the tranmission grid requirements be built to supprt develop of wind and solar power? Will the US become a net exporter of natural gas through LNG?
Future posts will attempt to answer some of these questions and provide support for some of the predictions.
