Reduced Gas Drilling with Increasing Gas Consumption is Likely to Check Falling Natural Gas Prices in the US

Reduced Gas Drilling with Increasing Gas Consumption is Likely to Check Falling Natural Gas Prices in the US

Summary

The US has been facing a supply surplus of natural gas since last year that has resulted into a steep fall in gas prices. Natural gas prices in the US have declined from around $4.54 per million British thermal units (MMBtu) on January 3, 2011 to $2.05 per MMBtu as per Henry Hub index as on April 27, 2012. The low prices have prompted E&P companies engaged in shale gas drilling and production in the US to shift their operations to liquid-rich areas, considering higher and sustained oil prices. This move by the E&P companies is expected to bring down the natural gas output of the country over one to two years. Furthermore, low natural gas prices in the US have encouraged its usage in power generation and petrochemical industries, which is expected to increase along with the country’s gas consumption in the near term. This rebalancing in the supply-demand scenario of natural gas in the US is expected to check the fall in gas prices in the near term.

Scope

• The report highlights the plans announced by major E&P companies engaged in US shale gas production to reduce gas drilling amidst low natural gas prices.
• Furthermore, it assesses possible impact of reduced drilling on the country's gas production in near future.
• It also assesses possible increase in natural gas consumption in the US driven by increased gas usage in power generation and petrochemicals sector
• It analyzes the potential impact of this supply-demand adjustment on natural gas prices in the US.

Reasons to buy

• To develop an understanding of current supply surplus in the US natural gas market and its impact on gas prices
• To keep abreast of current changes in the country's natural gas supply-demand scenario that may check the falling gas prices in the country