News / Business
The Price of Natural Gas is About More Than Just the Cost of Gas
Liquid condensate and natural gas liquids add to the value of natural gas making it possible for producers to continue to be profitable even as natural gas prices linger around $4 per MMBtu.
Natural gas producers are continuing to produce natural gas even as the cost has fallen back to the $4 per MMBtu price level. Why? Because “wet” natural gas is worth a lot more than many realize. Most natural gas wells also produce other products including liquid condensate and natural gas liquids (NGLs), such as ethane, butane and propane. Gas which contains these other products is considered “wet,” but after these products are stripped away, natural gas is almost entirely methane and is considered “dry.”
“A well that is rich in NGLs provides the producer with another revenue source,” says Valerie Wood, President of Energy Solutions, Inc. “The key here is that a barrel of NGLs tend to trade with the value of crude oil. The value of a barrel of NGLs has risen from $20 a barrel in late-2008 to around $50 per barrel today. During this same time, the price of an MMBtu of dry natural gas in Louisiana has fallen from around $7 per MMBtu in late-2008 to around $4 per MMBtu today.”
The Marcellus Shale is particularly rich in NGLs and with crude oil trading in excess of $70 per barrel, producers are yielding a price of just over $7 per MMBtu for their natural gas because of profitable condensate and NGLs.
Learn more about this issue in the May edition of The Advisor, an educational natural gas publication by Energy Solutions, Inc. This expansive 20-page May edition covers other topics including, the Deepwater Horizon oil spill, an update on storage inventories, long-term natural gas supply and demand outlooks, how and why pipeline basis markets have changed and much, much more.
Through May 31, 2010, Energy Solutions, Inc. is offering a three-month subscription to The Advisor for just $75. This is a full-fledged subscription where you’ll receive monthly and weekly editions, Fast Facts, plus Pricing and Storm Alerts. “This is a great value and a cost effective way to see how The Advisor can save you both time and money,” says Wood.
To learn more about this limited time offer, contact Kelly Gilboy at (608) 848-9589 or send your request to kgilboy@energysolutionsinc.com.
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 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.
