Natgas prices must rise to justify more production – US consultant

01 November 2011 21:54  [Source: ICIS news]

HOUSTON (ICIS)--Natural gas prices will need to increase to justify the investment required to meet growing demand, a US consulting firm said on Tuesday.

Natural gas prices have continued to fall since peaking in 2008, when they were over $12/MMbtu.

NYMEX natural gas futures settled at $3.934/MMbtu on Monday.

Meanwhile, global natural gas demand is projected to grow by 1.9%/year through 2030, said consulting firm Deloitte.

Deloitte presented a report titled “Navigating a fractured future: Insights into the future of the North American natural gas market” at the World Energy Council’s Houston Business Forum on Tuesday.

“Current depressed natural gas price levels would likely be insufficient to induce natural gas producers to make the level of capital investments required to meet the projected strong rise in demand,” the report said.

In the US, the demand growth will come almost exclusively from the power sector, as more companies are turning to natural gas to produce electricity.

While Deloitte does not see natural gas prices spiking to the levels seen in 2008, the firm expects strong demand to drive prices up at a rate of 4%/year through 2020.

By: Bobbie Clark
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