Natural Gas Prices Continue to Decline

Natural gas prices have continued to decline while the cost of other fuels has risen.  The economic downturn has played a major role in natural gas price weakness, but there is another factor that is having a significant impact on how the value of natural gas is viewed.  This factor, which is related to shale gas production, could mark an entirely new era for natural gas prices. 

The Eagle Ford Shale is a shale rock formation located in multiple counties in South Texas.  It has become one of the hottest shale plays this year because several companies are finding huge pools of oil and natural gas.  In fact, analysts are saying the South Texas Eagle Ford horizontal crude oil play may prove to be one of the most significant United States oil discoveries in the past 40 years. 

According to Valerie Wood, President of Energy Solutions, Inc., “All indications are that the Eagle Ford Shale will be the new shale play hitting the news, and as natural gas prices rise, it will become an even more profitable area so there is no indication that drilling in this new shale play is going to slow down.  If anything, it will increase as producers move existing rigs from higher-cost drilling regions to Eagle Ford.” 

Overall, the technology of horizontal drilling has changed the natural gas industry as shale gas supplies are now proven and plentiful.  However, not all shale plays are alike, and some are much more liquid-rich than others.  The liquids found in natural gas wells include ethane, propane, butane and other liquids, which at this time are more valuable than natural gas alone.  The Eagle Ford Shale is prolific and contains a high amount of rich liquids, which makes it one of the most profitable places to drill even in a low-cost natural gas priced environment. 

But even at today's lower price levels, the natural gas market is filled with risks and unknowns, especially given the futures contract positions being held by speculators.  To really understand the potential for natural gas prices to rebound from today's price levels, one must first dedicate the time to research and evaluate the numerous price drivers of natural gas.  After thorough research, one must determine the potential impact of an event or factor on natural gas prices.  This takes resources and knowledge.  To use this research to a competitive advantage and to implement informed, cost-effective natural gas purchases at the right time, one must be unbiased about the direction natural gas prices will move.  This takes discipline and experience. 

The staff at Energy Solutions, Inc. has dedicated the time and resources to bring you Natural Gas Price Outlook 2011, which provides:

·         an unbiased look at natural gas prices and price drivers;

·         why you may not want to use historical natural gas prices as a benchmark for future purchases;

·         the importance of natural gas liquids (propane, butane, ethane) in natural gas production;

·         a look at the complex mix of liquefied natural gas imports, shale supplies, natural gas-fired electric generation, natural gas-fueled vehicles, and more to identify future supply and demand concerns;

·         why the price ratio of crude oil to natural gas is no longer relevant;

·         the technical timing of price spikes and when to prepare for a major price rebound; and

·         an outlook you won’t want to dismiss.

Natural Gas Price Outlook 2011 will be available on November 15, 2010.  To learn more and secure your copy, visit http://www.naturalgasoutlook.com.

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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.