NGSA: US gas prices to feel slight upward pressure this summer

US natural gas likely will feel modest upward pressure this summer from levels a year earlier when Henry Hub prices averaged $3.77/MMbtu, the Natural Gas Supply Association said in its 2014 Outlook for Summer Gas, released June 4.

The upward gas price pressure is from summer to summer and does not include data on winter prices, the industry organization said.

Using published data and independent analyses, it evaluated the combined impact of weather, the general economy, customer demand, production activity, and storage inventories on the direction of gas prices for the coming summer, it said.

“When NGSA weighed all the different factors, the picture that emerged for this summer is one of slightly increased pressure on gas prices, chiefly because of the need to inject a greater than average amount of gas into storage in the wake of an extreme winter,” NGSA Chairman Gregory M. Vesey said.

“Looking at all key factors combined, NGSA expects soft upward pressure on prices compared with last summer,” he added.

NGSA’s forecast estimated weekly storage injections this summer would average 83 bcf. “We have confidence in the market’s resilience and ability to achieve those record weekly injections, thanks to the industry’s responsiveness and the abundance of shale gas,” said Vesey, who also is Chevron Corp.’s vice-president of gas supply and trading.

Historically flexible

“It’s a testament to the flexibility of our industry that we were able to average storage injections of 79 bcf/week even back in 2003, long before shale gas had increased production to our current record-setting levels,” he noted.

US Summer 2014 gas production is expected to break records, partly because of shale gas drilling and partly because a considerable amount of gas is being produced in association with drilling for crude oil and natural gas liquids, NGSA said.

Production also is robust because numerous pipelines and processing plants have gone into service, carrying previously stranded gas away from the Marcellus shale and other production areas, Vesey said.

The forecast also predicted that industrial gas demand will climb 5% year-to-year this summer as a result of gas-intensive industrial projects coming online. It will be offset by a drop in power generation demand from Summer 2013’s levels because of less coal-to-gas fuel switching, which considers a short-term, purely price-driven phenomenon.

“Fuel switching is a temporary response,” Vesey explained. “In contrast, the installation of new gas-fired electric capacity indicates that the long-term electric demand for gas is growing, and will continue to increase over the next few years.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Market watch: Energy futures prices rose slightly Friday

05/06/2002 Crude oil futures prices rose slightly Friday amid lingering uncertainty about a possible disruption of Middle East supplies, although tensions in ...

Gulf of Mexico oil service sector showing signs of an upturn

05/06/2002 The Gulf of Mexico oil service sector is experiencing the signs of an upturn, analysts with Simmons & Co. International, UBS Warburg LLC, and RBC D...

OTC: Industry, national agencies need to work together to make FPSOs work in the gulf

05/06/2002 Over the coming years, the oil and gas industry will have to keep an open line of communication with national agencies such as the US Coast Guard a...

Market watch: Energy futures prices fall as Iraq lifts embargo

05/07/2002 Crude oil futures prices fell Monday after Iraq announced plans to lift a self-imposed export embargo with exports expected to resume by Wednesday.

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