Natural gas goes parabolic
Natural gas is getting a bid that it hasn't seen since 2010: $5. The real question, though, is whether it can last
When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at email@example.com
by Max Fawcett
Remember when people were talking about the possibility of natural gas in North America going no-bid? Well, it’s safe to say that those days are over. The NYMEX spot price for natural gas went above $5 for the first time since 2010, and if one analyst is right (and he’s been proven right already about it getting to the $5 level in 2014) it could go higher – maybe even much higher – yet. “The fundamentals are largely in place for it to go higher,” Bill Powers told Andy Bell on a segment on BNN this morning. “We’ve seen numerous shale plays already start to decline, and there’s only a couple that are still growing. We’re also seeing a very small pickup in drilling activity. So we’re certainly heading towards further increases in price.”
Powers says natural gas prices could hit $7 this year, as storage gets down to 1 TCF and producers scramble to refill it in the summer and fall. “With only the Marcellus showing growth, it’ll be very difficult,” he said. “Much higher prices are going to be needed to stimulate new drilling.” And that’s not the only piece of good news for Alberta’s natural gas producers. Reuters has an exclusive report out today suggesting that international buyers are “lining up” to buy LNG from the U.S. “Up to a dozen long-term deals, each worth billions of dollars, have been penned behind closed doors with companies in China, Japan, Taiwan, Spain, France and Chile as global demand spikes, according to company, industry and trade sources,” it said.