You know those annoying TV ads where some fast-talking pitchman is selling you some amazing product, but you have to PICK UP THE PHONE!!! and ACT NOW!!!!….don’t you just hate them?

Well…PICK UP THE PHONE!!! ACT NOW!!!

Sorry, but for the first time, I understand how those pitch guys feel. Planet NYMEX has given us a little gift, and I’d sure like to help you enjoy it.

I just got done saving a customer 22% in 2009 over their 2008 bill. Yesterday, February went off the board at $.4476/therm. In the weeks to come I’ll explain exactly how to understand the economic ramifications of this outcome. Right now, what it means is: we haven’t seen prices this low in many years. Right now, what it means is we’re positioned to give you the budget stability that energy savings of 20-25% in 2009 can bring you.

So…ACT NOW!!! phone calls, e-mails, text messages, faxes, smoke signals, passenger pigeons and paper airplanes are all acceptable forms of contact.

Okay, I’m going back to your regularly scheduled Kathie now. And for you folks who have already called me, boy, did you time it right!

You have all heard me refer to the NYMEX (New York Mercantile Exchange). This week we will begin discussions on “Life on the Planet NYMEX”.

Why do we call the NYMEX a Planet? A planet has it’s own identity. It spins and changes direction often, creating it’s own eco-system/atmosphere. It relies on the universe but appears to be completely independent. We have seen the NYMEX react to changes in oil supply, the economy, the weather and apparently alien forces, which create volatility as well as surprises…unpleasant and otherwise.

Last year at this time we had the same amount of gas in national storage as we do now. Supply is strong. Not even sustained cold weather has been able to produce a rally, so prices should stay in this narrow range for while longer…maybe. Most of the people in the natural gas industry aren’t like you; they want prices to go up, and they’re working to make that happen. Production in the gulf has been cut because demand is down, and wellers are shutting down their marginal or unprofitable wells. Checked your local gas station lately? Prices WILL rise again. I really want you all to be sitting back and watching the show when that happens.

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Greetings! I understand some of you are warmer than others today. We’ll warm up with a look at the terminology used to describe the many ways natural gas can hide from us in the ground, making it so hard for us to know how much is still down there. Let’s begin.

Natural gas Resource Base – This is the broadest classification of Natural gas estimates. According to the EIA (Energy Information Administration.) The Total Natural Gas Resource base includes the estimate for the entire volume of natural gas that is (or was) trapped in the earth before extraction.

We can break this down by where it is, whether or not we know it’s there, and whether or not we can get at it. Different people use different breakdowns.

Where it is:

Conventional Natural Nas – Natural gas that exists in the earth and is trapped in a “reservoir.” This is the setting we’re most familiar with, and the resource estimate with which we have the most confidence.

Unconventional Natural Gas – This natural gas assumes another form or is present in a peculiar formation that makes its extraction different from conventional approaches. Most of our estimated resource is in forms that are technically non-recoverable using current or foreseeable technology.

Whether we know it’s there:

Discovered Recoverable Resources – Reservoirs that geologists have actually located through exploration. These include current production, all past production, and the known gas that is remaining to be produced. When we speak of our “reserve,” this is what we refer to. We know it’s there, and we know how to get it.

Undiscovered Resources – Deposits that have not been pinpointed, but are generally expected to exist based on geologic conditions. The US Department of the Interior and the US Geological Survey (USGS) are responsible for estimating how much undiscovered recoverable natural gas there is in onshore areas and state governed offshore areas of the US, and the Minerals Management Service (MMS) is responsible for estimating the undiscovered natural gas in Federal offshore areas

How we’ll get it:

Recoverable Resources – The technology exists to make its extraction possible.

Non-Recoverable Resources – There is a great deal of natural gas located in very low concentrations throughout the earth’s crust and the technology does not exist, nor is it expected to come about in the near future, to effectively extract this gas.

Since every resource estimate is an “educated guess,” there are constant revisions being made. New technology, combined with increased knowledge of particular areas and reservoirs, mean that these estimates are in a constant state of flux.

Here is the bottom line: even though there are many different people using different definitions and terminology, most agree that there is at least as much technically recoverable natural gas remaining to be found in the earth as already been located to date. In other words, we haven’t peaked yet. The question for next week: Is Natural gas renewable, or essentially irreplaceable? Remember that the formation of natural gas takes thousands and possibly millions of years. However, technology has come a long way since 1859, when the first well for natural gas reached down just 69 feet below the surface of the earth. Do you remember who did it? Check last week’s newsletter.

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Happy New Year! I’m back and ready to explore all the possibilities a new year offers.

First thing I need to tell you: we’re running out of natural gas! Of course, this won’t happen in any of our lifetimes (hey, they told me to start using “grabber” headlines…).

The question of long-term natural gas reserves, is however, a serious one. The United States currently meets more than 80% of our natural gas demand domestically, and the future of our energy stability and independence rests, in part, on how long we can maintain this.

So…how much is still down there? To answer this question, we need to get to know a few interrelated terms:

Conventional Natural Gas vs. Unconventional Natural Gas

Discovered Resources vs. Technically Recoverable Resources (vs. Economically Recoverable Resources)

Reserves vs. Proved Reserves vs. “Other” Reserves

All of these terms play a part in understanding the answer to our question, and needless to say, there are no universally accepted definitions for any of them. They are used differently by geologists, engineers, accountants, and others. And you’re going to be hearing them…a lot…in the coming years.

You can guess what this means. Each estimate of available, or potentially available natural gas in the ground in the United States is based on a different set of assumptions, complete with different tools and even referred to with different language. Since these are essentially “educated guesses” as to the amount of natural gas that exists in the earth, there are constant revisions being made. New technology, combined with increased knowledge of particular areas and reservoirs mean that these estimates are in a constant state of flux.

We’ll dive into definitions next week. If anyone wants to beat me to it, and sends me good definitions, I’ll make you a co-author.

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“Twas the Night before Christmas and all through the house, not a creature was stirring, not even a mouse.” That is because we have good ole Natural Gas to keep us warm.

What is “Natural Gas”? Natural Gas is a vital component of the world’s supply of energy. It is one of the cleanest, safest, and most useful of all energy sources. The word ‘gas’ itself has a variety of different uses, and meanings.

When we fuel our car, we put ‘gas’ in it. However, the gasoline that goes into your vehicle, while a fossil fuel itself, is very different from natural gas.

The ‘gas’ in the common barbecue is actually propane, which, while closely associated and commonly found in natural gas, is not really natural gas itself.

While commonly grouped in with other fossil fuels and sources of energy, there are many characteristics of natural gas that make it unique. Natural gas, in itself, might be considered a very uninteresting gas – it is colorless, shapeless, and odorless in its pure form. Quite uninteresting – except that natural gas is combustible, and when burned it gives off a great deal of energy. Unlike other fossil fuels, however, natural gas is clean burning and emits lower levels of potentially harmful byproducts into the air.

We require energy constantly, to heat our homes, cook our food, and generate our electricity. It is this need for energy that has elevated natural gas to such a level of importance in our society, and in our lives.

Do you know where Natural Gas came from – besides the Dinosaurs? Where and who first discovered it? More to come on this!

Merry Christmas, and I hope your Natural Gas heat is keeping you and all your mice snug this holiday season.

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Energy Basics, Pt.1. What is a therm?

Here’s one of the most basic terms in the natural gas market. You see it on your utility bills.

So…what does it mean? A therm is equal to 100,00 BTU, or British Thermal Units. A British Thermal Unit is the amount of thermal energy required to raise the temperature of 1 pound of water 1 degree Fahrenheit at sea level. Another way of looking at this is: a therm could raise 1,000 pounds of water 100 degrees, and we could all take a very hot bath.

Why “British”? Because the Brits were the ones to come up with this measurement – smart guys those Brits.

Here are some conversion basics for you to contemplate.

1 therm = 100,000 BTU
1 cubic foot of gas = 1,000 BTU
1 ccf = 100 cubic foot of gas

So 1 ccf = how many therms? Did you guess 1?

Actually, to be technically accurate, 1 ccf = approx. 1.08 therms. The conversion for this measure depends on the time of year; however, we can use an “estimate” of 1.08 and be fairly close. The thing to remember is that therms are measuring heat produced, cubic feet is measuring volume. Things other than volume can effect the amount of heat you get from a cubic foot of gas.

For price comparisons, note that they’re not exactly the same.

Other terms you will see: 1 Mcf = 1,000 cubic foot of gas = 1,000,000 Btu (1mmBtu) = 1dekatherm (dth) = 10 therms

Often times your utility company reads your meter in ccf. They convert that ccf into therms on your bill. The natural gas market trades in dekatherms (dth) and you will often see discussions about mmbtu.

And you thought I was going to let you off easy just because it’s almost Christmas! It’s all about following the zeros. More on following the zeros below.

On that happy note, next year we will discuss “Is there life on the Planet NYMEX.” Everyone at C2 Intl wishes you and your family a wonderful Holiday Season and a Healthy, Happy New Year.

If you’d like to run those numbers one more time, Give me a call and tell me what’s on your mind.

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