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Natural gas prices set to fall: analyst

Keywords: Tags  Bentek Energy, Ryan Smith, natural gas, liquefied natural gas, LNG, crude-by-rail, Eagle Ford shale, Thorsten Schier

NEW YORK — Despite a short-term boost from the severe winter weather, U.S. natural gas prices likely will only be supported at higher levels once liquefied natural gas (LNG) exports kick off, according to an industry analyst.

“(They) will probably go back down to where we were before in the pricing environment until LNG comes online,” Ryan Smith, energy analyst at Evergreen, Colo.-based Bentek Energy LLC, told attendees at AMM’s seventh annual Steel Tube and Pipe Conference in Houston.

Tepid prices last year drove operators away from dry gas shales to plays with more liquids and oil production, such as the Eagle Ford shale in Texas, and this is unlikely to change near term, Smith said. “Producers are chasing these oil plays and liquids plays because they’re getting (higher) returns on those commodities.”

Gas volumes are expected to get a boost in the longer term from power plants switching to the commodity, he said. “We expect that trend to continue as emission requirements are becoming more stringent.”

On the transportation front, crude-by-rail is expected to remain a factor near term due to limited pipeline infrastructure in new shale oil plays. “We expect rail volumes to pick up significantly in the Rockies and the Bakken (region),” Smith said.

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