The Big Picture on Natural Gas

Jim Letourneau, P.Geol.Big Picture Guywww.JimLetourneau.com

Montreal Investment Conference  - November 28, 2011

Energy Policy

"We have only two modes - complacency and panic."— James R. Schlesinger, the first U.S. Dept. of Energy secretary, in 1977, on the country's approach to energy.

Energy Use Per Capita

3 Game Changers

• Shale oil

• Shale gas

• Enhanced Oil Recovery

Energy Sources

CA - Electricity Renewables

CA - Electricity Translations

IMPORTS=COAL

THERMAL=NATURAL GAS

California Electricity - All

Quebec - 97% Hydro

Utica Shale Resource

•18-40 trillion cubic feet

•Market value of $70-140 billion

Natural Resources Canada

Global Natural Gas Prices

Platts Commodity Pulse

Global Arbitrage

North America has the cheapest natural gas in the world!

What Happened?

What Happened?

Bullish Arguments•The gas oil ratio is 6:1 on an energy

equivalence basis and prices should return to that ratio.

•Natural gas prices always “come back”

•The environmental concerns will cause more delays and more expense.

•Shale gas wells decline quickly

Bullish Arguments

•The gas oil ratio is 6:1 on an energy equivalence basis and prices should return to that ratio.

Bullish Arguments

•Natural gas prices always “come back”

Bullish Arguments

•The environmental concerns will cause more delays and more expense.

Bullish Arguments

•Shale gas well production declines quickly

Declines - Fayetteville

Refrac!

Refrac!

What to Do?

Tough market for natural gas producers. Large efficient operators will rule the roost.

What to Do?

Great time for natural gas consumers.

Beneficiaries

•Natural gas vehicles•Gas to liquids•Petrochemicals•LNG Terminals/Transport

ConclusionYou can never outsmart the market, if that's what you're trying to do, find something you love, for reasons you understand, that not everyone agrees with you about, and put your money in it. 

GENE SISKEL

www.JimLetourneau.com

Jim Letourneau, P.Geol.Big Picture Guy