The Desk
Braziel: Almost Bigger than the Beatles

Friday, December 14, 2007

Our conversation last week with Bentek Energy's Rusty Braziel on trends in Canadian gas flows and what the North American market might look like in '08 sparked all sorts of tangential thoughts on supply, prices, policy and, of course, potential natural gas-related publications and data services. He says that by the end of next year, something so big will be happening that it should make all other market fundamentals seems small indeed. And, by his read, it could possibly pound gas prices down to prices we've not seen in many years. Huh? What? Like, $3 natural gas? "So Rusty," we asked, "this thing will be bigger than the growth in LNG?"

"Absolutely." Bigger than changes in Canadian gas flows? "Much." Bigger than REX coming on line? "Yup, bigger than REX," he said. "Bigger than the Beatles?"

"Well, maybe not bigger than the Beatles," he says, "it's close, though." What can it be you ask? We'll give you a hint: It's deep down Southeast (that is, from mid-Texas to Mississippi), vast and has many, many moving parts. Braziel tells us that there is currently about $20 billion in mostly natural gas and crude infrastructure being built out down there. "We've not seen that level of pipeline construction in the US since the 1950s or 1960s. When all of that finally kicks in, it's going to completely change everything that anybody ever thought they understood about basis differentials," Braziel says.

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