Is Natural Gas Finally Ready for a Turnaround?
November 15 2010 - 11:23AM
Marketwired
The price of Natural Gas has been taking a beating for a while. The
reason for the sudden drop in prices is simply supply and demand.
Natural gas supplies have grown in recent years as new technologies
have made it easier for producers to unlock previously unreachable
reservoirs in onshore shale formations. Some natural gas producers
have vowed to reduce natural gas drilling until the gas becomes
more valuable, however the chances of supply being greatly reduced
are minimal. According to report from the US Energy Information
Association (EIA) US natural gas production in 2010 should show a
2.5% increase from 2009 levels. The statistical arm of the
Department of Energy also increased its 2011 production forecast by
0.4 billion cubic feet a day, to 60.77 billion cubic feet a day.
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Longer term, there is slightly more optimism surrounding natural
gas. Analysts argue that the natural gas oversupply in the United
States could make the nation a major natural gas exporter in recent
years. Demand for gas is soaring in Asia and other emerging markets
as their economies expand. At the moment the United States has
eight liquefied-natural-gas import facilities, but only one small
LNG export facility, which is in Alaska.
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More liquefied natural gas export facilities could be developed
going forward. Last week The Wall Street Journal reported that a
subsidiary of Cheniere Energy is working on a deal to supply
liquefied natural gas to one of China's largest independently owned
natural gas companies. Chesapeake Energy's Chief Executive Aubrey
McClendon told investors at a conference he has been in talks with
Cheniere to supply gas to the proposed facility. While Cheniere
would still need to build the liquefaction facility, the company's
CEO believes that interest in the project from natural gas
suppliers such as Chesapeake, as well as Chinese interest "confirms
the global appetite for US natural gas."
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