2013 May 3

The Master Resource Report  2013-05-03

Natural gas storage

This week’s EIA report on natural gas in storage should have opened a few more eyes. Storage is 30.9% below year ago levels, 6.2% below the trailing five year average and only 3% above the 2007-11 five year average (note this excludes the storage bubble in the 2008-12 five year average). Also of note was the 39.4% year-over-year drop in storage in the east region also reported by the EIA.

Here is the graph illustrating the comparison to the 2007-11 and 2008-12 five year averages. The 43 Bcf build was in line with our estimates and should be getting the industry’s attention for this time of year.

Click image for larger view.

News from BP isn’t going to help.

BP is shutting down a Gulf of Mexico gas-processing plant in Pascagoula, Mississippi for maintenance beginning today for 36 days. The plant handles production from Gulf platforms such as BP operated Thunder Horse which is currently battling its own steep production declines. While the discussion is focused on the oil production the plant closure will also impact natural gas supplies since the plant has the potential to handle 1.5 Bcf/d.

Baker Hughes gas rig count down again

Baker Hughes reported this morning that the U.S. natural gas rig count was down 12 from last week to 354. Year-over-year the gas rig count is down 252. The oil rig count was up 22 to 1403 rigs.

More on the nexus of Energy & Water

Below is a clip of a very interesting interactive map that overlays the areas of shale gas and oil development with areas of water stress. This is a clear example of how the world’s supply of energy and water are bound tightly to each other. Neither will remain abundant if the other becomes scarce. Click the image of the map or here to link to the original map which allows zooming in on specific shale regions.

Click image to open web page of interactive map in a new window.

Note: Clients and advisors at Ravenna Capital Management currently do not hold positions in BP.