Last Modified: Saturday, May 18, 2013 9:03 PM
A group of energy sector executives expect natural gas prices to remain around $4 per million British thermal units through the rest of 2013.
That information bodes well for companies like Louisiana Pigment, Sasol North America, Westlake Chemical, Cheniere, BG Group, and Magnolia LNG — which use natural gas as feedstock or are expanding or initiating natural gas projects for export.
International professional services company KPMG LLP’s Global Energy Institute surveyed a group of American business leaders and found that 73 percent of them expect natural gas prices to remain between $3 and $4.
“Great assurance of supply appears to be stabilizing commodity price environments and enabling large investments. At the same time, marginal production remains ‘shut in’ which could quickly be reinstated should the price picture become even more robust for gas,” stated Regina Mayor, oil and gas sector leader for KPMG, in the report.
More than 100 top managers were polled, with 73 percent responding that prices would remain low and stable.
The survey also found that 79 percent of the respondents support energy companies focusing on the use of natural gas in the creation of technology that doesn’t adversely affect the environment.
Sixty-two percent of those polled think low natural gas prices will spearhead the growth of manufacturing and economic development in the country.
“Natural gas production, particularly here in the U.S. has drastically shifted the energy paradigm and will be key to the future of the energy industry as exports grow,” Mayor stated. “The high production rates of natural gas and its reputation as a low-cost alternative to other energy sources continue to contribute to the recent growth in manufacturing, and as companies begin to monetize these new assets we’ll also see significant benefits for local and national economies.”
While energy processing companies benefit from low natural gas prices, drillers aren’t necessarily reaping a windfall.
Don Briggs, president of the Louisiana Oil and Gas Association, told the American Press that a small rise in prices would make a difference for some exploration companies.
“Low natural gas prices is good for the petrochemical industry for instances. Very good news. However, for us to be able to drill for natural gas we would like to see them a little higher. At least around $4 or $5,” he said. “Those are the types of prices that will still be good for the Louisiana petrochemical industry.”
He noted that in Europe and Asia, governments and businesses are spending between $11 and $13 for natural gas, which has to be imported. Japan is regarded as the largest natural gas importer in the world.
It is no secret that America is experiencing an energy renaissance compliments of new technology that allows unconventional drilling to take place in locations and depths thought to have been unimaginable a few years ago. As a result, with domestic energy production at its highest ever, some experts speculate that the country will be energy independent within a few decades.
At LNG17 in Houston in April, Betsy Spomer, BG Group vice president, global LNG, told an audience she thinks shale gas prices will increase over time.
“There’s no such thing as cheap LNG, as the (Henry Hub) prices goes back above $4 and will still go higher,” she said. “It won’t be enough to balance Asian demand by 2020.”
BG intends to export LNG. It has contracted 5.5 million tons per annum of LNG from Cheniere Energy’s Sabine Pass facility for $8.2 million over 20 years and is working on converting the Trunkline LNG terminal in Lake Charles into an export facility.
BG Group joined with Southern Union to complete the project.