US natural gas shales will determine industry winners

11 February 2009 19:10  [Source: ICIS news]

HOUSTON (ICIS news)--Only a handful of US natural gas producers will reap the benefits of the four major US natural gas shale areas that are under development, Chesapeake Energy’s CEO Aubrey McClendon said on Wednesday

There are only 10 US natural gas companies involved in the Barnett, Fayetteville, Marcellus and Haynesville gas shales while about 10,000 US companies continue to focus on gas fields founded in the 1950s and 1960s, McClendon said.

“This will define who will be the winners in this industry,” he said at a weeklong conference put on by the Cambridge Energy Research Associates dedicated to oil and gas known as CERA week.

Natural gas is an important raw material for the US chemical industry.

Development of the four shales ­- Barnett in the Dallas-Forth Worth, Texas area; Fayetteville in Arkansas; Haynesville in Louisiana and east Texas; and Marcellus in the northeast US - has begun within the last decade.

Every US company had the same type of reserve base five years ago but the shales will change the dynamic as costs for mining the new fields go down and output rises, McClendon said.

The cost curve for the US companies not involved in the shales will go in an opposite direction, especially as natural gas demand and prices stay stagnant in the global economic downturn, McClendon said.

“That’s what will define natural gas prices in the US,” he said.

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By: Ryan Hickman
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