Natural gas vs coal stocks

• coal stocks: KOL, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, RNO
• finviz (by vol) http://finviz.com/screener.ashx?v=211&ta=0&o=-averagevolume&t=KOL,%20BTU,%20WLT,%20CNX,%20ACI,%20ANR,%20JRCC,%20YZC,%20ARLP,%20AHGP,%20NRP,%20PVR,%20PVG,%20PVA,%20OXF,%20CLD,%20WLB,%20RNO

Natural Gas Resembling 1997 Gold

Investing in natural gas today is similar to buying gold in 1997, before a surge in the precious metal’s price, according to Jeffrey Gundlach, chief executive officer of DoubleLine Capital LP.

The chart illustrates his analogy. The chart compares gas-futures prices on the New York Mercantile Exchange with the price of gold for immediate delivery 15 years earlier.

Gundlach, whose Los Angeles-based firm runs mutual funds with $25 billion of assets, said on the call that he’s adding gas-related holdings to the DoubleLine Multi-Asset Growth Fund. His remarks were reported by the Business Insider and Pragmatic Capitalist blogs. A recording was unavailable yesterday pending a compliance review, according to Talkpoint.com, which hosted the call.

The fund had no more that 4.5 percent of assets in gas and other energy-related commodities as of March 31, according to data posted on the DoubleLine website. Hugoton Royalty Trust and San Juan Basin Royalty Trust, which own stakes in oil and gas properties, were among its holdings.

Natural gas fell below $2 per million British thermal units this month on the Nymex for the first time in a decade. Production increases from U.S. shale formations contributed to the decline. For the year, gas has lost 35 percent.

As 1997 ended, spot gold traded at its lowest price since 1979. The precious metal retreated 21 percent for the year and posted losses in each of the next three years. Since then, the price has risen sixfold, aided by an 11-year winning streak.

Belarus: we'll cut Russian oil, gas supplies to EU

(AP) MINSK, Belarus — Belarus issued a new threat Friday to halt Russia's oil and gas deliveries to Europe unless its pays a disputed debt, but Russian leaders ignored the warning and said they consider the energy dispute with the ex-Soviet neighbor closed.

Later Friday, Belarusian officials told President Alexander Lukashenko that officials from Russian state-controlled gas monopoly Gazprom were arriving Monday for talks, and that a deal could be signed Wednesday. The statement indicated Belarus may tacitly be backing off.

Gazprom on Thursday resumed supplies to Europe via Belarus, following three days of partial cutoffs after Belarus paid down its debt for gas supplies. Russia in its turn made transit fee payments to Belarus.

The dispute, which briefly caused a 40 percent drop in Russian gas supplies to EU-member Lithuania, added to the EU's concerns about Russia's reliability as a top energy supplier. A similar row with Ukraine last year cut off heating to millions in the middle of winter.

Belarus said it paid off its gas debt calculated at an increased rate sought by Moscow, and raised the transit costs accordingly. Russia, meanwhile, has paid for transit under the old rate, leaving the outstanding amount of $32 million, Belarus said.

Belarus warned it would cut the Russian gas transit supplies to Europe on Thursday if Russia doesn't pay the money, but it didn't deliver on that threat. On Friday, Belarusian President Alexander Lukashenko gave Russia until Saturday to pay the alleged debt or face the shutdown of all its oil and gas shipments to Europe via Belarus.

Gazprom has insisted it owes nothing, having paid the fee stipulated in the contract. The company said it could pay a higher transit fee in the future if Belarus allows it to cut a higher income on sales of gas at its domestic marker.

Gazprom's chief executive, Alexei Miller, said Friday it expects to sign a corresponding supplement to the contract with Belarus in the nearest time. He wouldn't comment on Lukashenko's threats, saying only that Russia considers the gas dispute closed.

Russian President Dmitry Medvedev said in a televised hookup from Canada, where he is attending a summit of global leaders, that he hopes that Belarusian officials "cool down" and fulfill their obligations under the contract with Gazprom.

Russia is Belarus' main ally and sponsor, but relations between the two former Soviet countries have worsened over financial arguments. Belarus has insisted that Russia should provide cheaper oil and gas as part of the customs union deal that is to come into force next month, but Russia has refused.

Russia cuts gas supplies to Belarus over debt

(AP) MOSCOW — Russia on Monday cut natural gas supplies to ex-Soviet neighbor Belarus over what it claims is a debt of nearly $200 million for gas already provided.

President Dmitry Medvedev met early Monday with Alexei Miller, the chief of state-controlled gas monopoly Gazprom, and in televised remarks ordered him to implement cuts "to protect the interests of the Russian state."

Miller said the company would gradually cut gas supplies to Belarus by 85 percent, the remainder serving to maintain its pipeline that is also used for transit of Russian gas supplies to other parts of Europe.

Russia last week warned Belarus to start paying off the debt or face cuts . Belarus has challenged the Russian claim and refused to pay.

Miller has said that European customers won't be affected as the company can channel gas supplies normally going via Belarus to another transit pipeline crossing Ukraine. Also, gas consumption in summer is low compared with its peak in the winter and the pipelines aren't filled to full capacity.

Moscow-based Metropol investment bank also said in a note to investors that the shutdown is unlikely to hurt Gazprom's customers in Europe during the low season. "Gazprom could ship the gas through Ukraine to Poland and on to Germany," it said, adding that the conflict will likely be resolved quickly.

Russia has cut gas supplies to both Ukraine and Belarus several times in recent years due to payment disputes, and many European consumers have suffered amid freezing winter temperatures.

Poland is at the top of the list for shale potential

Houston companies planning to explore for natural gas

Dec. 9 (Bloomberg) -- Two Houston-based companies, ConocoPhillips and Marathon Oil, are betting that Poland, which gets half of its natural gas from Russia, can yield a development boom in shale formations like those that drove a jump in U.S. output of the heating fuel.

The third- and fourth-biggest U.S. oil companies obtained exploration licenses this year covering hundreds of thousands of acres in Poland. The country, which imports 72 percent of its gas, could become an exporter of the fuel, said Maciej Wozniak, chief adviser on energy security to Prime Minister Donald Tusk.

“Everything leads to a conclusion that in four or five years, and this is how much time we have to prepare for this, Poland will become a place with quite a lot of gas,” Wozniak said in a telephone interview.

Shale developments, where rock formations are fractured and injected with water and sand to release trapped fuel, account for about 15 percent of U.S. gas output, according to Oklahoma City-based Chesapeake Energy Corp. After successes in the U.S., producers such as Houston-based Marathon seek to exploit similar geological formations around the world.

“We looked at a number of countries in Europe and through Asia,” Marathon Executive Vice President David Roberts told investors in a Nov. 19 presentation after the company obtained its license. “Poland bubbled up to the top of our list.”

Russia Reliance

Shale projects contributed to a drop in U.S. gas prices from a 2008 high of $13.69 per million British thermal units to a 2009 average of about $4.06.

Successful drilling wouldn’t end Poland’s reliance on Moscow-based OAO Gazprom, which disrupted gas supplies to 20 European nations in January on a price dispute with Ukraine. Poland’s gas-distribution monopoly, Polskie Gornictwo Naftowe i Gazownictwo SA, agreed Nov. 3 to contract with Gazprom for almost three-fourths of its gas until 2037. The deal is pending approval by governments of both countries.

“It would have no choice but to pay the price agreed to in the contract even if the price on the cash market falls due to additional supplies from the shale formations,” said Vince Kaminski, an adjunct professor at Rice University in Houston and former risk-management director at Enron Corp.

Gas discoveries could enhance energy security for Poland and neighboring countries such as the Czech Republic and Slovakia. Polskie Gornictwo, based in Warsaw, cut sales to the nation’s largest refiner, PKN Orlen SA, and the biggest fertilizer maker, Zaklady Azotowe Pulawy SA, after the Russian- Ukrainian conflict left Poland with limited supplies.

Energy Security

“Increasing natural-gas production in Poland, especially in such a sustainable way, is very important for us,” Wozniak said. “Given our situation and the problems we had over the last years with securing stable supply on the gas market in the country, this initiative is particularly valuable.”

Polish shale gas is “a long way off” from having a “serious” impact, Gazprom said in a statement. Long-term contracts are needed for gas users to secure supplies and for producers to finance infrastructure projects, the company said.

Polskie Gornictwo, which produces about 4.1 billion cubic meters of gas a year in Poland, plans to drill in shale formations with Marathon and Chevron Corp., said Piotr Gliniak, the company’s exploration director. It may turn out that Polish shale formations have too much water to tap using techniques currently employed in the U.S., he said.

“It seems to me that at the moment, the foreign companies are a bit too optimistic about what may be found in Poland,” Gliniak said.

Silurian Shale

Representatives of Marathon and ConocoPhillips of Houston declined to comment for this article.

If the 430 million-year-old Silurian shale that stretches through Poland proves to be “an economic resource,” 48 trillion cubic feet (1.4 trillion cubic meters) of gas could be recovered over decades, according to Rhodri Thomas, a project adviser at Wood Mackenzie Ltd. in Edinburgh. That much gas would sell for more than $240 billion at current futures prices.

ConocoPhillips has an option to develop as many as 1 million acres in the Silurian shale under an exploration agreement with Warsaw-based Lane Energy, the U.S. company said in a Sept. 9 presentation to investors. The companies plan to drill the first well near the northern Polish town of Lebork, said Kamlesh Parmar, country manager at Lane Energy.

Parmar said the concession area has all the geological attributes, including a thick and organically rich rock formation, to become a successful shale-gas development.