Denitex does it again, and some very interesting titbits at the end…

It’s so well argued, we post it verbatim (emphasis is ours); Stranded gas, stranded arguments:

• So after the discovery of the largest gas discovery in the world, estimated at about 1-2 billion barrels of oil equivalents, flowing at 382 mmcfd with 5,000 barrels a day of condensates, through a small pipe, confirmed by a third-party at the site, the shorts find themselves in a quandary. “What to argue?” they say. Well: 1) They can deny the discovery, but then there is the inconvenient photo of the flare. 2) They can deny the significance of the discovery. But alas the Antelope ceremony was attended by o/g representatives from the largest multinational oil companies. 3) They traveled not to a resort, but to a PNG jungle; 4) They also came from many notable locations: Europe, Japan, China. This alone speaks volumes to any person with an iota of common sense.
• The short will not say this, but I will: A US company could not have paid for these people to attend a US flaring ceremony in the Rockies, on the Kansas plains or in the Haynesville Shale. Haynesville may be a monster to a US operator, but it is a mouse to IOC’s Antelope. An invitation to Haynesville would have produced a collective yawn from from Europe, Japan and China. Only huge interest would attract this huge representation that was in this PNG jungle. Something “huge” was taking place at Antelope, right Mr. Short?
• Yes, but “the gas is stranded!” says Mr. Short. “Ah, well, darn it, that spoils everything.” Let’s see: 1) These people attended a stranded discovery, 2) in a stranded jungle 3) knowing full well that no matter the size of the discovery, it was doomed, because it would have to just sit in a jungle. But if so, why bother to attend at all? As they left, the short envisioned oil magnates saying:
• “Well that 1-2 billion barrels oil equivalents from that single well is something none of us have ever seen before! And what a flare! and from just one well! That monster gas flow, the world’s largest, that would certainly help our huge Asian population! Ensure our energy security! Promote a clean energy future! Provide us with the hugest of profits! Too bad it’s in a jungle! Too bad it’s stranded! We have so many good sites out in the middle of the Atlantic, 3000 feet under, that will produce a fraction of Antelope at far greater cost, cost us a fortune with perhaps no return! But there’s nothing stranded about the Atlantic!”
• There was a time when the IOC investor may have had to ponder whether the Elk wells were enough to feed an LNG plant, whether IOC would attract foreign interest and mega bucks. I wondered this myself. But Antelope has replaced doubt with certainty. The issue now is not whether there will be a stripping plant, an LNG plant, an exploration partner, but simply who will the partners be, how huge will be the payments to be a part of the huge discovery, with Antelope 2 chewing at the bit.
• It is not the gas that is stranded, but the short who must now promote thinking that is so obviously stranded from reality. But then they are represented by “Lucy Furrs,” i.e. “Lucifers.” That should tell us something.

Excellent stuff, but there were a few other interesting posts today, both by Kenkooksam, the guy with the best sources and a keen eye for interesting articles:

• Middle East to become a Net NG Importer
• Video Matt Simmons on CNBC GAO peak oil
• Credit Suisse thinks IOC capex estimate too low

Some comment from us:

• The first two are about trouble in the Middle East. Gas production has increased manifold there (gas is cheaper and cleaner than oil, for those who forget…), but it’s gas from oilfields. The gas production lowers the pressure, ever more water needs to be pumped in to remain the pressure, this cannot continue indefinitely, something has to give…
• We’ve long cherished the maxim that clean energy will drive out dirtier energy. We see this happening with countries like Indonesia using more of their gas at home and exporting the dirtier and more expensive oil. Now something like this might happen in the Middle East as well. Surprising? Hardly. Haven’t we exported dirty manufacturing to the third world and kept the cleaner processes ourselves?
• The third post is very interesting for several reasons: first, InterOil is hitting radar screens (it would be surprising if not, with the largest ever flow rates under their belt..)
• Also, we received some interesting arguments from a good source:

They are saying our cap ex is too low because they are comparing to Exxon.

• They forget IOC does not have to build a harbor, housing, power facilities, water facilities, deep water jetty system, we already have land rights, and our pipeline is less than half the distance and is not in the mountainous terrain of the highlands. Our technology is off-the-shelf and steel and construction costs have come down in today’s economy.

Capping of another useful day on the boards..