Newspaper article THE JOURNAL RECORD

Exec: Natural Gas Prices to Remain Low, Flat

Newspaper article THE JOURNAL RECORD

Exec: Natural Gas Prices to Remain Low, Flat

Article excerpt

An overabundance of natural gas, generated by the success of shale plays like the giant Marcellus Shale formation in the northeastern United States, will keep natural gas prices down for the next six to nine months, said William "Billy" Maxwell, vice president and general manager of natural gas at the Omaha, Neb.- based Gavilon Group LLC.

Maxwell addressed more than 200 people during the monthly meeting of the Natural Gas and Energy Association of Oklahoma at the Tulsa Renaissance Hotel and Convention Center on Thursday. The NGEAO is a nonprofit association made up of upstream, midstream and downstream natural gas and energy industry people, as well as service companies that rely on Oklahoma's natural gas and energy resources for their business.

At the end of 2010, natural gas prices remained close to $4 per 1,000 cubic feet (mcf), down nearly 30 percent from the same time a year ago, although futures contracts were $4.50 for February and $6 per mcf into March.

The oversupply of natural gas should continue to dominate natural gas pricing through the year, Maxwell said.

"We are still in a bearish pattern," Maxwell said. He sees prices ticking upward heading into 2012.

The wild card remains economic development, Maxwell said.

"It will be interesting to observe the potential building of commercial and industrial demand for 2011 and the effect on pricing," Maxwell said.

Other factors influencing pricing include the continuing trend of coal plant retirements and the increased use of natural gas as the fuel of choice in electric generation.

Of course, weather, supply and demand, storage and the amount of liquefied natural gas and compressed natural gas remain factors that influence pricing, Maxwell said.

The weather could push prices higher in the short term, he said.

On Thursday, snow covered 48 states across the U.S., Maxwell said, showing a recent satellite image.

"That has not happened since the last half of the 1970s," Maxwell said. "The rest of the winter is supportive of higher prices."

Looking to the summer forecast, Oklahoma and Texas appear to be in for another hot, dry period, which would drive air conditioning and push consumption and prices upward, Maxwell said. …

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