Natural Gas Prices to Remain Low with Production Gains

The 914 data from the Energy Information Administration (EIA) shows that natural gas production in the Lower-48 states grew 1.06 billion cubic feet (Bcf) per day in October, which represents a 1.9 percent increase from September levels.  This took many by surprise as September’s data on production from the EIA showed a 1.31 Bcf per day decline.   Meanwhile, Baker Hughes says the most recent natural gas drilling rig count shows another gain of 22 rigs last week, taking the total to 781.

“In the past, a decline in drilling rigs correlated to a decline in production,” says Valerie Wood, President of Energy Solutions, Inc.  “However, more efficient technologies allow producers to tap prolific shale supplies at a lower cost, and therefore natural gas production levels are down only around 1 percent since August 2008 even though the natural gas drilling rig count has been cut in half from its peak of 1,606 rigs in the fall of 2008.”

“There are now signs that the natural gas drilling rig count may have bottomed when it hit a low of 665 in July 2009,” says Wood.  “If that’s the case, natural gas prices for 2010 could see some of the same price weakness that 2009 did, with the potential to dip into the low to mid-$3 per MMBtu.”

Learn more about the 2010 natural gas price outlook in the January edition of The Advisor, a newsletter specifically written for businesses as an educational tool and guide about the natural gas industry and price trends. Request a complimentary copy of the January edition of The Advisor by sending an e-mail to request-pr@energysolutionsinc.com or call (608) 848-9589.

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About Energy Solutions, Inc.

Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.