15 December 2009 21:35 [Source: ICIS news]
By: Joseph Chang
NEW YORK (ICIS news)--Volatility in US natural gas prices will diminish in the years ahead as more supply comes on line, the chairman of a trade group said on Tuesday.
“Because of the sea change we’ve seen in onshore natural gas production from shale formations, we’ve added stability to the mix,” said David Trice, chairman of the American Natural Gas Alliance (ANGA), in an interview with ICIS.
“There is abundant natural gas in North America, and we have the ability to not only serve new and increasing markets, but also the customers such as those in the industrial sector that have been there for years,” Trice said.
Natural gas is the primary feedstock for the production of petrochemicals in the US.
The proliferation of gas discoveries and enhanced extraction methods used in major onshore shale formations across the US such as the Barnett, Marcellus, Haynesville and Woodford shale regions have boosted the available supply of natural gas, Trice said.
From 2002 to 2008, there was significant volatility in natural gas prices, Trice said.
Ten years ago, roughly 30% of US natural gas was produced in the Gulf of Mexico.
“Every time a hurricane headed to the Gulf, gas prices went up,” Trice said.
“Because of surging US production onshore from shale gas formations, today offshore gas production is down to only about 10% of production,” he added.
In addition to the US shale formations, there are additional tight gas sand plays as well as two major shale plays being developed in Canada, Trice said.
“There are many different companies developing these plays and as they compete for market share, that will bring supply to the market and dampen volatility,” he said.
ExxonMobil’s planned acquisition of US-based XTO Energy for $31bn (€21bn) will significantly boost its exposure to US shale gas.
“The guys that have a lot of cash on their balance sheets are moving into these plays and that will also add more stability,” Trice said.
In addition to the ANGA, Trice is also chairman of US oil and gas firm Newfield Exploration. He retired as CEO of the company in May.
($1 = €0.68)
To discuss issues facing the chemical industry go to ICIS connect
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections