Gas prices remain low, despite perceived global potential

A natural gas analyst said gas production can fuel the world’s needs for years to come, thanks to technological advancements of the past and those coming in the future.

Guntis Moritis, production editor of Oil & Gas Journal, said the vast resources of coalbed methane, shale gas and tight-sand gas worldwide are a hot topic, with experts increasingly debating their economic potential.

Moritis spoke on behalf of PennWell Corp. (the publication’s parent) and Oil & Gas Journal in advance of their Unconventional Gas International Conference & Exhibition, which begins Sept. 29 at the Fort Worth Convention Center. Conference topics are expected to include how to make the leap from North America to the world, the outlook for crude oil, government regulations, future technologies and more.

Gas prices are low, Moritis admitted, but should increase as the gas-consuming winter season gets under way. Gas futures currently trade around $2.50 per million British thermal units, as of publication. That price is far from economic, most producers and analysts agree, but a cold winter season could spike demand and increase the commodity’s price.

In a separate statement, University of North Texas professor Terry Clower, director of the university’s Center for Economic Development and Research, said natural gas companies’ recovery could follow that of the general economy.

“As the economy picks up steam, demand for natural gas will increase and prices should firm up at significantly higher levels,” Clower said in a Sept. 2 statement. “Here’s hoping for a cold, early winter.”

He added job losses in the energy sector, especially in North Texas, will hamper the area’s recovery, even though initially it helped insulate cities from the downturn.

“Thousands of gas-field jobs have disappeared in 2009 as natural gas prices have fallen below $4,” he said. “Unfortunately, this is also sparking layoffs in other sectors of the economy as drillers and gas field service providers slow down operations and spend less for goods and business services.”

Despite the current malaise, shale gas represents one-half of the total unconventional gas resources worldwide, with North America claiming 3,840 trillion cubic feet, according to 2001 estimates, which no doubt will change with new study, Moritis said. Sparked by the success of the Barnett Shale – the first deep shale play, whose interest took off in the mid-1990s – new plays have been found nationwide, with subsequent successes in the Woodford and Fayetteville shales.

“This proved that the Barnett was not the only productive deep shale out there,” Moritis said. New production is taking off in the Haynesville Shale and Marcellus Shale.

“In the past three or four years, shale gas production has seen a sizeable increase,” said Moritis, adding growth has doubled from about 4 billion cubic feet per day to current levels of about 8 billion cubic feet of gas per day coming from shale plays.

Companies continue to explore gas plays abroad, too, in North Africa, South America, Australia, southern Africa, India, Asia and Russia.

Future and developing technologies, such as seismic mapping, and different types of chemicals used to make fracing more effective, will help spur increased gas production.

As for the concern that current estimates of worldwide gas are overblown, Moritis said: “The indications are that there is quite a lot of it, whether it’s all economic to get out is still out there.”

For information on the conference, visit unconventionalgas.net.