News / Business
Why Some Producers are Getting $7 per MMBtu for Their Natural Gas
Liquid condensate and natural gas liquids, which are priced based on the crude oil market, bring a hidden value to natural gas producers.
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, some producers are yielding a price of just over $7 per MMBtu for their natural gas because of the benefit of 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, and 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.
Get your copy of the May edition today! Click here to sign up for a FREE 30-day trial to The Advisor and you’ll gain access to this critical edition, plus you’ll receive next month’s edition and weekly updates at no cost for the next 30 days. “This is a great way to see how The Advisor can save you both time and money,” says Wood.
# # #
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.
