• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 8 minutes The Inconvenient Truth Of Electric Cars
  • 2 mins The Plastics Problem
  • 9 hours Here we go folks, the wish of so many: Pres. Trump threatens to lessen US security role in Strait of Hormuz, unveils sanctions
  • 2 hours To be(lieve) or Not To be(lieve): U.S. Treasury Secretary Says U.S.-China Trade Deal Is 90% Done
  • 4 hours SHALE MAGIC: Let the oil flow: US to lead oil output growth through 2030: ConocoPhillips chief economist
  • 4 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 54 mins EIA reports 12 mm bbls Inventory draw . . . . NO BIG DEAL . . . because U.S. EXPORTED RECORD 12 MILLION BARRELS DAY OF CRUDE + PETROLEUM PRODUCTS ! ! ! THAT'S HUGE !
  • 9 hours Looks like Trump is putting together a "Real" Coalition to protect Persian shipping lanes. Makes perfect sense. NO Fake "Coalition's of the Willing" UPDATE REUTERS Pompeo "Sentinel Program"
  • 17 mins Its called reality: Economic, policy challenges to make Asia's energy transition painfully slow
  • 21 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 17 hours Hard To Believe: UAE Will Work To Defuse Middle East Tension
  • 11 hours Cap and trade: What could Oregon’s carbon policy cost you?
  • 4 hours On the hobby side of things
  • 22 hours The Strait of Hormuz is the world’s most important oil transit chokepoint
Alt Text

The Gas Flaring Crisis In The U.S. Oil Patch

The amount of natural gas…

Alt Text

A Watershed Moment For Gazprom

The Kremlin’s push for reform…

Alt Text

Cheap Gas To Fuel New Global Demand Boom

The IEA has urged nations…

Taras Berezowsky

Taras Berezowsky

Taras is a writer for MetalMiner who operate the largest metals-related media site in the US according to third party ranking sites. With a preemptive…

More Info

Premium Content

How Long Will Natural Gas Prices Stay Low?

The natural gas market’s underperformance in the investment world hampers its current role as (at least an investment) alternative to crude oil, effectively making the abundant fuel take a backseat.

The biggest hurdles for gas production and consumption to become as ubiquitous as that of oil – or at least as profitable – were recently outlined by Mickey Fulp, who calls himself the Mercenary Geologist, which I’ll summarize below:

• Supplies: Abundant. (And often re-exploited on top of existing wells.)

• Risk/Reward: Natural gas’ development play requires low risk venture capital.

• Transportation: Natural gas is difficult to transport, needing dedicated pipelines to the wellhead. This infrastructure is sorely lacking.

• Storage: Difficult. Must be stored in underground caverns in gaseous form; liquid form is better to store, but proper liquefaction facilities are unavailable/inadequate.

• Processing Capacity: Insufficient in the US.

• Power Plant Capacity: Most domestic plants are coal-fired; retooling them to use natural gas is burdensome and expensive. Also, even though natural gas burns far less CO2 than coal, its main component – methane – is a bigger culprit behind greenhouse gas emissions.

• Environmental Opposition to Drilling, Transportation, Processing, and Storage: Almost self-explanatory.

• Land Access: “The federal government owns nearly 30% of the country’s land where an estimated 40 percent of potential natural gas resources exist. Adding in federal offshore waters ups this resource figure to almost 60%.”

But as demand of natural gas begins increasing, especially in quickly growing economies such as China’s (which my colleague Stuart wrote about in a July 8 post), the price may follow, and if increased prices indicate any sort of sustainable trend, then that will spur investment to build up production infrastructure.

Indeed, here in the US, the fracking process – a primary method of extracting natural gas by injecting water and chemicals into the rock that contains it – has been under fire for years; but potential production may soon climb astronomically.

Will Natural Gas Prices Grow…or Not?

Penn State University professors recently released a report stating that production from Pennsylvania’s Marcellus Shale – home to the largest gas reserves in the US – will yield 3.5 billion cubic feet of gas per day in by the end of 2011. This would be double 2010?s yield.

In 2012, production should reach 6.7 billion cubic feet per day and in 2020, up to 17.5 billion, according to the Penn State report. This year, some 2,300 wells will be drilled (up from 1,405 in 2010), and the professors forecast some 2,500 per year to be drilled by the time 2020 rolls around.

The big win for the industry is New York State’s recent reversal of the ban on the practice. According to Pennsylvania’s Department of Environmental Protection, 24 of the 25 highest-producing wells are in the counties that border New York.

With the US leading the world in natural gas production (nearly 23 billion cubic feet in 2009), these predicted production amounts from the Marcellus – not to mention other expanding reserves – would considerably add to the global supply. Although the gas price is expected to remain stagnant for the next 25 years (at 0.5 percent annual growth, according to Fulp), if China ups its appetite for the stuff, US natural gas could become a much more crucial global commodity in the decades to come.

With power plants and metal producers both relying on natural gas more and more, it may not be cheap for long.

By. Taras Berezowsky

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends, strategies, and trade policies that will impact how you source and/or trade metals and related metals services, MetalMiner provides unique insight, analysis, and tools for buyers, purchasing professionals, and everyone else for whom metals and their related markets matter.




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News