"World Oil" Natural Gas' Future | Russell T. Rudy Energy LLC
John Higgins, the publisher of “World Oil” magazine was the speaker at the February meeting of the Houston Chapter of the American Petroleum Institute (API). Predictably, his comments were quite interesting and provocative. While they are not at great variance with what many other analysts have forecast, his are backed up by a wealth of experience and data. In a previous post I presented an overview of his remarks, and the publication’s specific crude oil forecast. In this post I summarize “World Oil’s” natural gas forecast for 2015. Hopefully future posts will cover what they anticipate for domestic oil and gas, and in as much as it impacts onshore U. S. prospects, international as well.
During 2014 global natural gas supply increased to 122.9 trillion cubic feet (Tcf), and demand to 140.5 Tcf. Most of the excess demand was met with drawdowns from inventories in storage.
Here in the U. S. it is a different story as much of the country is experiencing regional oversupply as a result of shale production. In June of 2008 the price of natural gas began its fall from $12.60 per thousand cubic feet (Mcf) to a low of $1.95 per Mcf in June of 2013. Except for a brief spike due to the Polar Vortex in 2014 the price has stabilized between $2.50 and $3.50 per Mcf.
Meanwhile, natural gas prices in Europe ranged from $9-10 per Mcf, and $13-18 in Asia. On the face of it, exporting U. S. natural gas as LNG would seem to make sense and a number of projects are in varying stages of development to do just that. However, international LNG contracts are linked to the price of crude oil, so there is currently natural gas price parity across the globe.
Despite low prices domestic natural gas production had increased almost 11% by October 2014. Nevertheless, operators in the Marcellus shale indicated to “World Oil” that they plan to slightly increase the number of wells in Pennsylvania 1.1% to 2,255 in 2015.
At least for now it appears that we can anticipate relative stability in natural gas markets.
To learn more, please go to www.worldoil.com .
