Natural gas industry ready to rebuild depleted U.S. supply

marinelink.com
Thursday, March 06, 2014

U.S. utilities have withdrawn a record amount of natural gas from underground storage to meet heating and power needs during an extremely cold winter, but gas producers say they are confident they can rebuild inventory.
 

By Eileen O'Grady


"We believe North America has the capacity to supply far more natural gas than we are doing now at a reasonable price," said William Maloney, Statoil's executive vice president of development and production for North America, speaking at the IHS CERAWeek conference in Houston, an annual meeting of global energy leaders.

Some traders have expressed doubts that inventories would be rebuilt in time for next winter, but Maloney said the biggest challenge is not supply, but demand.

"Is there enough demand to lead to sustained higher prices and can matching midstream and upstream capacity happen in a continuous way?"

Maloney noted that the number of rigs looking for gas has fallen, but gas production has kept rising as the industry finds more efficient methods to drill and complete wells in U.S. shale formations.

At Statoil, which produces in the Marcellus and Bakken formations, drilling efficiency gains have been in the 25 to 50 percent range, Maloney said. "We are not going to stop improving."

The long and bitterly cold winter season has reduced gas in storage to the lowest level in a decade, according to government estimates, leading some traders to project that gas inventory will end the winter season with less than 1 trillion cubic feet, much below the record storage levels seen in the past few years as shale gas production soared.

"In the space of just a few short months, the multi-year surplus has disappeared with the rapid system-wide destocking that has fundamentally altered our outlook on the market," Teri Viswanath, director of natural gas strategy at BNP Paribas, said in a note earlier this week.

"Despite the industry's best efforts to bring additional supplies to market, we believe that it will take more than a single injection season to swing the market back into equilibrium," Viswanath said.

Maloney declined to comment on the current storage level, he said Statoil has recently brought new wells online after falling a little behind. "The rigs are not going away; we will continue drilling," he said.

Bob MacKnight, an IHS director, offered a more cautious outlook, saying gas prices must rise to $5 per million British thermal units "for a sustained period" to get producers to boost drilling activity.

"The forward curve is telling them not to go out and drill a gas well," MacKnight said.

To meet the growing appetite for gas to fuel new power plants and as a feedstock for the petrochemical industry, additional infrastructure must be built, said William Lawson, vice president of The Williams Cos.

"Infrastructure is the vital link to allow producers to achieve the economic return they need in order to sustain development and keep rigs in the basin," said Lawson. "It is also the assurance that the demand (side) ... needs to have to invest billions and billions in growing their consumption of these fuels."

The Marcellus shale region alone could need $26 billion in gathering lines, pipelines and other processing equipment in the next decade, Lawson said.

While the producers said abundant gas from shale formations will supply the United States for many decades, cost and regulation will always be issues, said Rob Franklin president of ExxonMobil's gas and power marketing company.

"In January, we broke the record for (gas) demand five times," said Franklin. While prices spiked in response to some gas constraints, there were few problems, he said.

"There are enough rigs," he said. "We are more than able to keep up."
 

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Statoil and DNV GL to Drive Subsea Factory Interface Standardization

Statoil has entered into an agreement with DNV GL to establish an industrial cooperation to introduce an international industry standard for subsea process technology.

Halliburton to Settle US Gulf Spill Claims for $1.1b

Halliburton Co said it reached a $1.1 billion settlement for a majority of claims against the company for its role in the BP oil spill in the Gulf of Mexico in 2010.

Joe Barton: Lift Oil Export Ban

A senior U.S. Congressman from Texas has come out in full support of the United States lifting the 40-year old ban on crude oil exports, putting him at odds with

Energy

Rowan Viking Rig Upgrade Completed

Damen Shiprepair Vlissingen, part of Damen Shiprepair & Conversion, has completed the upgrade of a Keppel Fels ‘N’ Class drilling rig, one of the largest in the North Sea,

Algeria in Talks to Export Crude to Venezuela

Algeria is in talks to export crude oil to fellow OPEC member Venezuela, Algerian Energy Minister Youcef Yousfi said on Tuesday, confirming a Reuters report. Last week,

Statoil and DNV GL to Drive Subsea Factory Interface Standardization

Statoil has entered into an agreement with DNV GL to establish an industrial cooperation to introduce an international industry standard for subsea process technology.

LNG

Russia's Shipping Major Reports Strong 1H 2014

OAO Sovcomflot (SCF Group), Russia’s largest shipping company and a global leader in seaborne energy transportation and offshore services, has announced its financial

Skangass Granted Permission for LNG Terminal

The Swedish Government (Länsstyrelsen in Dalarnas Län) has granted Skangass permission to build and operate a new Terminal for LNG (Liquefied Natural Gas) within the harbour in Gävle, Sweden.

Policy Uncertainty Threatens to Slow Renewable Energy Momentum

IEA forecast sees renewable power as a cost-competitive option in an increasing number of cases, but facing growing risks to deployment over the medium term. The

Logistics

Logistical Scenario Analysis for Hydrodynamic Applications

To calculate the operability of the whole logistics chain, rather than only individual operations, MARIN has developed the hydrodynamic scenario analysis program ScenSim.

Algeria in Talks to Export Crude to Venezuela

Algeria is in talks to export crude oil to fellow OPEC member Venezuela, Algerian Energy Minister Youcef Yousfi said on Tuesday, confirming a Reuters report. Last week,

Chevron Announces Alliance with Petrol Ofisi

Chevron has signed agreements with the fuel products distribution and lubricants company of Turkey, Petrol Ofisi in Istanbul, that will result in improved supplies

 
 
Maritime Contracts Maritime Security Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Repair Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1658 sec (6 req/sec)