Ins and outs of the natural gas industry

Interesting. A whole article that said absolutely nothing.

Gill wrote:

Interesting. A whole article that said absolutely nothing.

I tell you what it DIDN'T say; It didn't say that production was down in the basin because of the "new pit rules". It did say production was down because the price of gas is down. It also said the price of gas is down because the industry is running record storage levels. It also said when the drillers believe gas demand is equal to current production, they will start drilling in San Juan Co. again.

I guess we can read what we want to into this. Price is down, pipelines are full, customers aren't buying. All true.
Pit rules & confusing new regulations adding $100 to $150 thousand per well in SJC, uncertanity in government. All true.
Gas futures are starting to sell at $10 now, so expect nat. gas prices to more than double for consumers when it does come back.

Gas is a nationwide business. If the price goes up, gas producers will start drilling again..but will they drill in New Mexico? Right now, I have people in the industry telling me that Pennsylvania is the place to be. Several companies that have reduced their work force here lately are already gearing up for the next boom...only they are gearing up in Pennsylvania.
The people of New Mexico need to realize that, like uranium and timber, the world WILL get it's resources from somewhere. Just because New Mexico creates an unfavorable business climate through overbearing regulation and confiscatory taxation doesn't mean producers of these products will merely roll over and pay for it all, when only a thousand miles away, the business climate is so much better, where it appears the people actually WANT the jobs and the associated economic boost.
Those folks who see the reduction of oil and gas drilling in New Mexico as a benefit to the environment really need to get out more and take a look around: Do you honestly think that just because we aren't pumping oil and gas here, that means everyone is just going to quit using it?
Do you think that just because we aren't mining uranium in New Mexico anymore that the world has said, "Aww, well, I guess we can't get uranium from New Mexico anymore, so we might as well give up on getting any and shut all these plants down." Nonsense. Rest assured that folks are mining uranium somewhere...just not here.
And where do you think those 2x4's down at Home Depot and Lowe's are coming from? Just because we've driven the timber industry out of the state, and essentially out of the nation, doesn't mean there's any shortage of lumber. We're just getting most of it from Canada now, giving them our money and our jobs.
It's simple economics, folks. The impact of this recession could have been made much less painful in New Mexico given a few simple steps by government. But our government, which apparently thinks it knows everything, has decided to stand firm. Richardson doesn't care, it's not like he has to be re-elected. He's only got his "legacy" to worry about, and apparently he'd rather be seen as a leader in the "Green Movement" rather than someone who actually led a state successfully through a recession.(Perhaps he's looking for a seat on Al Gore's jet.) And the rest of our elected officials are counting on our short memory span to carry them through the next voting cycle.
If New Mexico wants any kind of economic life after this recession, we'd better start now, putting people into office who want New Mexicans to benefit from the resources this state has to offer. This idea that we'll just get oil, gas, timber, minerals, etc. from out of state so we can keep New Mexico pretty will be our downfall. There simply aren't enough people out there who want to come look at New Mexico's trees and rocks to pay for it all.

Right now, Senator Bingaman is trying to push legislation through Congress to lock away even more of our state from human visitation and industrial use. Bingaman is sponsoring Senate bill 1689, which would close off yet another third of a million acres of New Mexico's resource rich lands from use.
This is happening at the very time New Mexico's economy is imploding, unemployment continues to skyrocket, and both the Federal and State government are broke.
Never fear folks! Regardless of your ability to keep or get a job, pay your bills, or feed your family: The mundane, daily work of government goes on as if nothing out of the ordinary is happening.
It all reminds me of the age-old story of how Nero fiddled while Rome burned.
I urge everyone to call or write Senator Bingaman and let him know that now is certainly not the time for government to behave as usual. Stop Senate Bill 1689. Right now, our Senators and Representatives should only be working on legislation that will improve the economy. Another government land grab ain't gonna find anyone a good paying job.
It's time to demand action from your government, at every level, to preserve what jobs we have, and bring back the proven industries that have created our prosperity in the past. If our current batch of "elected representatives" refuses to answer the call, then at election time, put them in the unemployment line.

Hmmmm...my post about the current government land grab was supposed to be a follow up to the post I had previously written on this subject. Instead, it appears to have over-written it. Hopefully, the system will find the previous post and put it in place! Otherwise, I'll have to do a re-write!

Still, we don't need anymore government land grabs at this dire time for our economy, we need jobs.

Paladin wrote:

I guess we can read what we want to into this. Price is down, pipelines are full, customers aren't buying. All true.
Pit rules & confusing new regulations adding $100 to $150 thousand per well in SJC, uncertanity in government. All true.
Gas futures are starting to sell at $10 now, so expect nat. gas prices to more than double for consumers when it does come back.

You know I've seen several estimates regarding the cost of the new pit rules. These numbers range from 25% increase to over 50%. And that is for some new wells. Not all new wells are increased by the same amount. Some, as I understand it, not at all over the old rules. The problem is, I can't find any real reliable source of data.
Where did yours come from?

Also $10 futures? Oct. high was a little over $5, as was the EOM close.

C Lee ..Why don;t you run for office! SJC is about to go bust if we can't get back on track in being a big supplier of natural gas and oil. It is so sad to see so many people losing their jobs and having to leave to go to Penn..how do we get the town fired up and have our message heard?

community friend wrote:

C Lee ..Why don;t you run for office!

Yeah, CL, I'd like to see that myself. All I read from you is how screwed up our government is.( Just Democratic positions in the government, that is). So let's see you step up. Pick your place-city, county, state. Jump out there. Stop pontificating and step up to some leadership. The county needs you. A new rig in every back yard. Unlined pits in every park. Hot dog, happy days are here again. No more busts in the basin, only booms. Down with pit rules and up with rigs.

So the rig count is down. Is that really so bad in the long run? Sucks about the job loss but, the slower we pull the gas and oil out of the ground, the longer it will last, sustaining at least some long term jobs and finite tax revenue for as long as possible. Guys like C lee want it all pulled out in a few years it seems.