16 June 2011 20:24 [Source: ICIS news]
By Joe Kamalick
WASHINGTON (ICIS)--US natural gas producers are predicting stable gas prices over the often energy-turbulent North American summer months, thanks in large part to new shale gas supplies that could help revive the overall ?xml:namespace>
In its annual “Summer Outlook”, the Natural Gas Supply Association (NGSA) said it expects that natural gas consumers “will benefit from stable and steady natural gas prices” through the summer months of June through August.
Although for antitrust reasons the association does not predict actual price points, the NGSA’s analysis supports a recent US Department of Energy (DOE) forecast for stable domestic gas prices for this year at an average of around $4.25/MMBtu.
In its most recent short-term energy outlook (STEO), the department also said it expects US 2012 natural gas prices to be steady throughout the year at around $4.65/MMBtu.
The NGSA summer outlook analysis is good news for US petrochemical producers and downstream chemical manufacturers who are heavily dependent on natural gas as both a power fuel and process feedstock.
Natural gas and natural gas liquids together make up 65% of
During the North American summer, natural gas prices can fluctuate because of a number of production, demand and environmental factors that can shift unexpectedly.
Summer weather can be the most mercurial factor. A sudden increase in hot weather across the country can trigger dramatic increased demand for air conditioning from residential and commercial power customers. As electric utilities scramble to meet an upsurge in usage, they gobble up more natural gas to turn their turbines.
Particularly severe summertime weather can both increase natural gas demand and hurt supply.
A heat wave across the
To gauge the likely up or down pricing pressures for natural gas over the summer months, the NGSA looks at weather, economy, customer demand, gas storage and supply.
On the weather front, the
NOAA expects the North American summer months this year will be 18% cooler than last year’s blistering season and 3.4% cooler than the 30-year average for this time of year.
That means less demand for gas-fuelled electric power to keep homes, offices and shopping malls comfortable, creating some downward pressure on gas prices.
In contrast, the summer of 2010 was a sweatbox for much of the
US manufacturing industries - major consumers of natural gas - are forecast for 4.5% growth, also annualised, for the June-August period, a more moderate pace than last year’s 6.9% gain in the same three-month period.
The NGSA expects the more modest GDP and manufacturing growth rates to have a neutral impact on the season’s gas prices.
That increase in domestic gas production (due in part to new shale gas output) will more than offset anticipated slight declines in natgas imports from
Gas storage also is expected to be up slightly for this summer season compared with the same period last year, another neutral influence on pricing, said the NGSA.
“This is the third year in a row that we’ve seen a stable market for natural gas,” said NGSA president Skip Horvath.
“We anticipate that the trend has legs not only because of the shale plays now being developed, but because of all our supply sources,” he said.
“We expect industrial demand to be our most significant growth sector this summer,” he added.
“Although not yet at pre-recession strength, primary metals demand for natural gas is climbing and seems poised for continued growth,” he said. “At the same time, overall industrial demand for natural gas is positioned to match or surpass pre-recession levels.”
Horvath said the outlook for stable and steady gas prices “should help the nation’s recovering industrial sector”.
That industrial recovery includes a spate of new petrochemical production plans or studies.
In an Op-Ed piece written for the Wheeling, West Virginia, News-Register, Bayer Corporation president Greg Babe likened the new North American shale gas developments to the California Gold Rush of the 1840s.
The Wall Street Journal quoted Dan DiMicco, chief executive of Nucor, the largest
Nucor recently began construction of a new $750m (€533m) steel plant in
DiMicco told Manhattan Institute senior fellow Robert Bryce that the shale breakthrough “could change the entire manufacturing base in the
($1 = €0.71)
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|