Analyst sees near-term natural gas prices below $3/MMbtu

Natural gas prices are expected to hover below $3/MMbtu for 6-24 months, primarily bouncing between $1.75/MMbtu and $2.50/MMbtu, David Cunningham, managing director of Tudor, Pickering, Holt & Co., told a Mayer Brown LLP energy conference on May 23.

“Long term, we see the price at $5/MMbtu,” Cunningham said, referring to average prices on the New York Mercantile Exchange in 3-5 years. He noted that gas producers are getting more efficient and lowering their costs so future break-even levels could move lower.

Currently gas production is not economic because the break-even point for most US gas basins is at least $3/MMbtu, he said. Investors instead have shifted their focus toward liquids plays.

A price of $5-5.50/MMbtu is the price level at which investors will regain confidence in the gas industry, Cunningham said.

Associated gas from unconventional liquids plays is a popular topic, Cunningham said. Even though the US currently is in a gas supply overhang, associated gas production still brings revenue for producers.

“Today we are flaring gas in the Bakken because we don’t have the infrastructure in place,” Cunningham said. Many pipeline projects are under way or in the planning stages for the Bakken formation in North Dakota and Montana.

The US needs additional demand for gas, Cunningham said. He believes the rig count will fall in coming months.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

Judge bars Anadarko e-mails as evidence in Macondo blowout hearing

03/21/2014 A federal district judge in New Orleans refused to accept e-mails between Anadarko Petroleum Corp. and BP PLC as evidence in a hearing to determine...

Industry group welcomes most UK budget moves

03/21/2014 Oil & Gas UK voiced support for all but one of several measures affecting the offshore producing industry announced in the UK government’s annu...

MARKET WATCH: Crude oil, gas futures prices slide entering spring

03/21/2014

The first day of spring in the northern hemisphere was marked by lower crude oil and natural gas futures prices.

OMV acquires West of Shetland licenses from Hess

03/21/2014 OMV AG has reached an agreement with Hess Corp. to acquire four licenses in West of Shetland, UK, including Cambo field and the Blackrock prospect,...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected