Natural Gas Booming and Global Oil Production Waning

Keith Kohl

Written By Keith Kohl

Posted September 13, 2009

Welcome to the Energy and Capital Weekend Edition – our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.

This week, natural gas investors finally had a reason to smile.

The latest jump in natural gas prices couldn’t have come at a better time. On Thursday, the EIA released their weekly storage report, which showed an increase of 69 Bcf, raising the total to 3.39 Tcf of natural gas — still well above the five-year average.

A Bloomberg News Analyst reported yesterday:

Natural gas soared 15 percent yesterday, the biggest one-day gain in almost five years, sparked by Energy Department data that showed a smaller-than-forecast increase in U.S. stockpiles. Confidence among U.S. consumers probably increased in September for the first time in three months as the pace of job losses slowed and the economy showed signs of pulling out of the recession.

How desperate are we for some good news?

Let’s just say that things are getting rough for some oil producers.

Pemex, Mexico’s state-run oil company, announced that production at the once-mighty Cantarell field has fallen to approximately 500,000 barrels per day. If you don’t think that’s a big deal, keep in mind the Cantarell field was pumping out more than 2.1 million barrels of crude oil just four years ago.

The company announced the loss of oil exports as costing Mexico roughly $14 billion a year in revenue. That’s a hefty chunk of change, considering 40% of the country’s budget comes from oil.

Meanwhile, BP’s latest discovery of a new ‘giant oil field’ in the deep waters in the Gulf of Mexico has the Mexican president salivating over developing their offshore resources. President Felipe Calderon recently stated, ""It’s very likely we have similar [oil] wealth, but we don’t have . . . the technology or the organizational and operational capacity to do it by ourselves."

Energy analyst Chris Ruppel put BP’s discovery into perspective: "It says we’re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics."

But as you should know when it comes to oil discoveries lately, there’s always a catch. I briefly touched upon BP’s Tiber oil discovery earlier this week.

And looking at the steady rise of oil imports to meet our demand, complete U.S. energy independence may be nothing more than wishful thinking. Be sure to get the full story here.

Of course, we’re not going down without a fight. As my colleague, Nick Hodge, revealed to readers recently, alternative energy growth is on the move. . . particularly in the wind sector.

The question now is whether or not we’ll be ready when we reach that crossroad in energy.

Enjoy your weekend,

keith kohl

Keith Kohl

Energy and Capital

P.S. Just in case you missed out on any of our top stories this week from Energy and Capital or any of our companion publications, feel free to catch up now . .


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