NEW YORK There will be
little upside for natural gas prices in 2013, according to an
"Theres probably more
downside risk than upside risk," Justin Carlson, manager of
energy analysis at Evergreen, Colo.-based Bentek Energy LLC,
told AMM, adding that although the company forecasts
an average 2013 price of about $3.46 per million British
thermal units (mmBtu), tags could well be lower.
The New York Mercantile
Exchanges Henry Hub natural gas price for March delivery
settled at $3.16 per mmBtu on Feb. 14.
The guarded forecast comes as
stockpiles of gas remain high and more supply waits in the
"Even in our forward curves, I
would argue theres downside risk based on the fact that
theres significant production still to come online,"
Carlson said, pointing to about 10 billion cubic feet of
gas-processing capacity that could potentially start up this
A recent shift to exploring for
liquids rather than for low-priced gas has not necessarily led
to a cutback in natural gas production. "There are a lot of
oil-rich plays in the Utica (shale) and in the Eagle Ford
(shale) that produce a lot of residue gas," Carlson said.
Gas producers also have become
more efficient, making it unlikely that there will be
significant production cutbacks, even at lower prices.
"Theyve realized better economics," Carlson said. For
example, Encana Corp. recently announced that it will again
increase drill rigs in the Haynesville shale, which underlies
southwestern Arkansas, northwest Louisiana and east Texas,
because decreasing production costs there make output
profitable even at current price levels, he said.
The market is unlikely to see
significant price spikes even in the long run, although demand
is expected to pick up significantly due to eventual exports of
liquid natural gas (LNG) and increasing industrial use, as any
rise will draw out ample additional production.
"Theres a significant
amount of supply that becomes very economic in the $5 to $6
range," Carlson said.