Friday, January 21, 2011

Natural Gas Prices - Is the wild ride over?

Stable natural gas prices in the $6/MMBTU range will support the shale gas industry in the lower 48 and also construction of the Alaska gas pipeline. The Dallas Morning News reports these comments of Atmos Energy's Chairman (retrieved from Downstream Today):

"We've got a 100-year supply of natural gas that we know of, and we've got stable prices," Best said Friday during a panel discussion at a North Dallas Chamber of Commerce gathering. "It's Economics 101. When you have a big supply, you have stable prices, and those prices are stable today."

Natural gas prices have been around $4 per thousand cubic feet for the past year, after rising three times as high a couple of years ago. Natural gas companies have been producing more of the heating and electricity fuel in the U.S. because of cheaper and more effective technology.

Atmos operates the regulated natural gas utility in North Texas and elsewhere. The company doesn't make money by selling natural gas, only from delivering the gas.

Best said the sweet spot for natural gas prices is between $5 and $7 per thousand cubic feet.

"At that level, the producers could drill and would have a fair return. The consumers would not feel that prices were too high," he said.
Long term prices in this "sweet spot" range should help build American energy independence including the Alaska Gas Pipeline.

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