IPAA chairman predicts steady US natural gas prices for 2-5 years

US natural gas prices likely will hold at near current levels for as long as 2-5 years rather than fall further, as many forecasters think, the chairman of the Independent Petroleum Association of America said Wednesday. Jerry Jordan spoke at the Independent Oil and Gas Association of New York's summer meeting.


Alan Petzet
Chief editor - Exploration and Economics
Oil & Gas Journal

FINDLEY LAKE, NY, July 11 -- US natural gas prices likely will hold at near current levels for as long as 2-5 years rather than fall further, as many forecasters think, the chairman of the Independent Petroleum Association of America said Wednesday.

Jerry Jordan, speaking at the Independent Oil and Gas Association of New York's summer meeting, said producers can expect nondevelopment activists to continue blocking access to new sources of oil and gas supplies. He said such groups have held up drilling in Alaska, the eastern Gulf of Mexico, the Rocky Mountains, and the Great Lakes.

"These people are prevailing," Jordan told association members at a workshop on a risky new gas play in the Appalachian basin of southwestern New York.

He said industry should be cautious in asking for a national energy policy, because federal actions in the past sometimes have had onerous effects on the industry, such as the Natural Gas Policy Act of 1978 and the "windfall profits" tax on oil in the late 1970s.

The workshop focused on increasing exploratory drilling for gas in Ordovician Trenton- Black River Dolomite in New York.

Ten discoveries have been made in the play. At yearend, 30 wells were on line in five fields in Steuben County in the Finger Lakes region, said Brad Field, of the New York Department of Environmental Conservation.

Those fields produced 4.5 bcf last year. Operators are Fairman Corp., DuBois, Pa.; Columbia Natural Resources Inc., Charleston, W.Va.; and Pennsylvania General Energy Corp., Warren, Pa.

New operators are still joining the play, and 35 wells could be drilled this year vs. 20 for each of the past 3 years. The meeting was told that depending on success, 2001 Trenton production could total 6-10 bcf.

The state has begun 500 to 600-acre spacing for wells after determining its blanket 40-acre spacing rule was inappropriate for the play.

Speakers noted that Trenton exploration is taking place in a part of New York not accustomed to drilling, and a public education effort is needed.

Chris Hanson, of the Bureau of Land Management's Milwaukee, Wis., office, observed that during a public meeting Tuesday regarding drilling operations in Finger Lakes National Forest, no one spoke on behalf of the oil industry. The Milwaukee BLM office manages the forest.

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