Unconventional Gas Boosts Outlook for Future Supply
HOUSTON (Dow Jones Newswires), Feb. 12, 2009
Cambridge Energy Research Associates significantly augmented its expectations for North American gas supply in the wake of the success of unconventional gas production.
The Massachusetts-based energy consultancy revised its 2015 outlook for North American natural gas supply to 80 billion cubic feet per day, from 69 billion cubic feet a day, said CERA analyst Michael Stoppard.
The scenario has changed from "one of resource constraint to one of opportunity constraint," Stoppard said.
The revision underscores changing perceptions about the productive capacity of North America's natural gas fields. In recent years the industry, fearing future shortages, spent heavily in liquefied natural gas projects and even envisioned the construction of a pipeline to bring gas from far-off Alaska.
An overabundance of supply in the U.S. market has been made apparent by falling demand in the wake of a global recession. Natural gas prices have fallen more than 65% since peaking at $13.694 per million British thermal units in July.
The front-month natural gas contract on the New York Mercantile Exchange has plunged 67% from its peak of $13.694 a million British thermalunits hit on July 2. Gas for March delivery settled down 11 cents at $4.532/MMBtu on Wednesday.
The decline in prices has caused producers to idle rigs, trim production growth outlooks and pare back spending. Companies such as Chesapeake Energy Corp., Devon Energy Corp. and Petrohawk have announced plans to reduce spending amid shrinking cash flow.
More supply is also on the way. Many liquefaction and regasification projects that were planned when energy was expensive are scheduled to come onstream soon.
"LNG supplies are coming," rising significantly in the second half of 2009, Stoppard said.
Copyright (c) 2009 Dow Jones & Company, Inc.
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