killer driller update, page-28

B2 I don't tend to agree with your blanket forecast re the SP impact of any excess gas supply. That is, while you make a point in terms of North America, I think you need to clarify your position in terms of the impact excess supply would have here.

My own observation is that there is a stark difference between the largely shale and other conventional gases which dominate the bulk of the futures traded on the Nymex HHub, and what is being developed and is proposed to be exported from Aust. So the impact you imply is questionable.

Another observation is that Gas and Oil Journal recently (last six months) reported on Korean and Japanese intentions to create a new futures index for unconventional gases (to include eg. LNG from CSG, surprise surprise). A move in this direction would be away from the HH pricing regime, not that it has really ever entered into the australiasian gas contracting process in any meaningful way.

Its also worth noting that the energy policy of the big proposed importers, paricularly Korea and Japan, has been for many years has been to diversify the sources of energy supply. IMO this will continue and it is in the long term interests of these economies to develop multiple sources of energy supply. One only needs to consider the issues Europe is facing with dependence on Rusky gas to understand the potential risks from lack of diversification. I think the need to diversify will force purchasers to accept fair prices in the contracting process. So, in short, sorry but I disagree with you on the SP impact of excess supply.

Another thing, fear mongering (whether intended or not), take it elsewhere. We could sit here all day and argue about oil and gas supply price impacts, but I'm forever sceptical of profit agendas and you'll likely get a similar response from me next time.

Cheers from Quebec...
Wiseup