2013 December 6

The Master Resource Report 2013-12-06

Big three digit draw on natural gas in storage

The EIA reported a large draw of 162 Bcf of natural gas from storage for the week ending November 29th. This put the average below last year’s level by 5.2% and below the 5-year average (2008-2012) by 2.8%.

The graph below plots working gas in storage based on EIA data. The red dots represent working gas storage levels for the same week in each of the prior six years. It will be interesting to see if the current trend towards high draws and lower gas in storage continue this winter.

Working gas in storage 2013-12-06

Click graph for larger view

More on the Capital Expenditure front

Shell announced Thursday that it would not move forward on its proposed gas-to-liquids (GTL) project in Louisiana despite the state’s offer of $112 million grant as well as other tax incentives.

Bloomberg – The project would have used natural gas to produce 140,000 barrels a day of liquid fuels and other products normally made from oil, The Hague-based company said in a statement today. Despite ample U.S. gas supplies from a boom in shale production, gas-to-liquids isn’t “a viable option for Shell in North America,” the company said.

The original budget had been at least $12 billion but the costs have now ballooned to over $20 billion according to the company.

Note: Currently clients and advisors at Ravenna Capital Management hold positions in Shell.