Tuesday, January 24, 2012

Off by a factor of 3? Maybe. US Energy Dept cuts Natural Gas forecasts by 66%

If you care, you already saw that Natural Gas prices were up on Monday.  Why?  Well in part because our previous estimates of the natural gas potential in the Marcellus Shale were WAY off :( 

From Bloomberg:

The U.S. Energy Department cut its estimate for natural gas reserves in the Marcellus shale formation by 66 percent, citing improved data on drilling and production......The estimated Marcellus reserves would meet U.S. gas demand for about six years, using 2010 consumption data, according to the Energy Department, down from 17 years in the previous outlook.
It should be noted that many experts, including US Geological Survey had been cutting forecasts since August as wells were not producing up to previous expectations.
Full disclosure: SIMM is long natural gas, but short Chesapeake,one of the largest producers of natural gas.
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