11 October 2011 18:31 [Source: ICIS news]
WASHINGTON (ICIS)--There will be plenty of natural gas available for US industrial and residential consumers during the coming North American winter months, natgas producers said on Tuesday, and gas prices should be even with last winter’s rates.
The Natural Gas Supply Association (NGSA) said that pressure on natural gas prices during the cold weather heating months of October through March should be flat with last winter’s rates.
In its annual winter outlook assessment of the natural gas market, the association compiles published and independent data on economic development, likely gas demand, drilling and production activity and storage inventories to gauge the direction of gas prices for the cold weather season ahead.
“When we weighed and combined all the different influences on supply and demand, the big picture that emerged for the coming winter appears to be a stable outlook for natural gas consumers,” said NGSA president Skip Horvath.
The availability and price of natural gas are of concern to US petrochemical producers and downstream chemical makers because they are heavily dependent on gas as both a feedstock and power fuel.
The current US spot price for natural gas is about $3.5/MMBtu, according to ICIS.
“NGSA expects the economy and the weather, two factors that most influence winter demand, to place subtle downward pressure on natural gas market prices this winter,” the association said.
NGSA, whose member firms are integrated and independent natgas producers, said that it expects gas demand from residential and commercial consumers – the latter including shopping malls, office buildings, schools and other public venues – will be slightly lower than in the 2010-2011 winter season because the coming cold weather season is forecast to be more mild.
The 2010-2011 North American winter season was one of the coldest in ten years, the association noted.
Demand from industrial consumers, including chemicals producers, was expected to be comparable to the year-earlier period, NGSA said.
The association noted that the shift by electric utilities from coal-fired to natural-gas fuelled power generation has continued for an unprecedented three straight years and was likely to continue into 2014.
Despite that increasing consumption of natgas by the power industry, the association indicated that demand growth has been accommodated by gains in gas production, in large part because of shale gas development.
“Production is anticipated to set a record this winter, as producers concentrate on liquids-rich shale formations,” Horvath said.
“In fact, the data show that shale wells are yielding ever greater amounts of natural gas,” he added.
“Since the onset of shale production on a large scale, we’ve had three straight winter forecasts for level price pressure,” he said, adding: “Natural gas customers are definitely benefitting from shale gas.”
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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