Bmark Energy, Inc.

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Bmark's Certified Energy Procurement Professionals help businesses realize significant savings on their daily energy costs. Energy Market Info Current NYMEX Oil, gas, electricity markets: Energy Markets Natural Gas Storage: EIA Weekly Report Storage Scorecard: View The Storage Scorecard Natural gas chart: February 2010 Graph Natural gas futures: Current NYMEX During the spring, summer and early fall (normally April through October), natural gas supply (domestic and imports combined) is greater than the demand, so excess supply is injected into storage for the winter months. During the winter months, demand exceeds supply and withdrawals are made from storage to cover the shortfall between higher weather-related demand and gas availability. In Our Opinion - December 15, 2009 Time to Ride the Storage Wave So, this is what it looks like sitting atop the storage rollercoaster. Storage chart period ending 12/04/09. Here's what happens when excess supply meets decreased demand. Weekly view of January 2010 graph. Isn't it truly awe inspiring to be sitting on this much gas and we're already into December! Never before has there been this much gas in storage, let alone this late in the winter. So where do we go from here? Well, as one may imagine, much depends upon this winter's weather. Some say this winter will be the coldest winter in 20 years while others predict a weather that is much less robust, more in line with normal winter patterns. El Nino this, La Nina that. I don't know what the weather will be, so let's take a look at each scenario for possible market directions for spring pricing. Without getting too technical, this year's storage level is "about" 450 - 500 Bcf above last year and the same above the 5-year average . . . or roughly a 15% bulge in the pipeline. A 15% surplus is a lot. 15% more income, 15% more votes, 15% smarter, 15% faster, or 15% bigger is a notable event. So, something has to give here. Back to the weather. November has come and gone with little fanfare. So let's look at our winter going from December through March. If the weather stays mild through the rest of December, it's not unlikely to see January contract pricing drop below $4 . . . and perhaps lower, as we head further into winter. Early winter weather (Dec & Jan) will play an important role in the trajectory of natural gas pricing. If the weather remains mild we could easily enter spring with 2000+ Bcf in storage, and we've always said that this storage level in spring would "break the bank" or in this case break the current pricing model. However, if the weather suddenly chills, we could easily see pricing jump back to the $5 and $6 levels. I read where England was bracing for temperatures to plummet well below zero in parts of northern England and Scotland over the next few days. So here are a few ifs. If the weather remains cold here and also in Europe and Asia, and if crude oil remains high, the demand for LNG would increase, raising the cost of LNG in the global market making it unattractive or overpriced for the US market. If our market strengthens, then some Canadian, Quatar, or Trinidad LNG may find a home here, increasing supply and tempering rates. Whatever the reason or season, the US always appears to be an LNG port of last resort Our gasification ports have been built, so it's not really a matter of if the LNG will come . . . but when.

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