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U.S. utilities have withdrawn a record amount of natural gas from underground storage to meet heating and power needs during an extremely cold winter, but gas producers say they are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


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter February 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Brazil's CEEE to sell stakes in Wind Farms, Dams

Brazil's Companhia Estadual de Energia Elétrica (CEEE), a power utility controlled by the state of Rio Grande do Sul, will sell assets including stakes in wind farms,

DP World Bolsters Investment in India

DP World Pvt. Ltd, the world’s fourth biggest container port operator majority owned by the Dubai government, has plans to invest over $1 billion in India for augmenting its port-related operations.

SunEdison Restrained from 'Unusual' Asset Transfers

Solar company SunEdison Inc said a U.S. court has restrained the company from making any unusual asset transfers until a hearing in a lawsuit brought on by investors

Energy

Brazil's CEEE to sell stakes in Wind Farms, Dams

Brazil's Companhia Estadual de Energia Elétrica (CEEE), a power utility controlled by the state of Rio Grande do Sul, will sell assets including stakes in wind farms,

Premier Oil and Rockhopper Abandon Ocean Rig Contract

Two of the major British players in Falkland Islands offshore oil development, Premier Oil and Rockhopper Exploration, cancelled a joint venture contract with Ocean Rig UDW.

US Oil Drillers Cut Rigs to Least in 6 Years

U.S. energy firms this week cut oil rigs for an eighth week in a row to the lowest levels since January 2010, data showed on Friday, as energy firms continue to

LNG

Cautious Optimism on Pacific NorthWest LNG Report

Canadian Environmental Assessment Agency (CEAA)  has ruled that Pacific NorthWest LNG’s project in British Columbia would likely harm harbour porpoises and contribute to climate change,

N.America's First LNG Marine Fuel Terminal Opens

Harvey Gulf announced the opening of the first marine LNG fueling terminal in North America. Less than a year after the delivery of the M/V Harvey Energy, America’s first LNG-powered vessel,

FSRU Golar Tundra Sold to Golar LNG Partners

Golar LNG Limited has entered into a purchase agreement to sell the Golar Tundra, a floating storage and regasification unit (FSRU), to Golar LNG Partners LP for a sale price of $330 million.

Logistics

Hapag-Lloyd Enhances Conosur Service

Hapag-Lloyd has informed about its service enhancements on the Conosur Service (South America West Coast to South America East Coast). This is being upgraded by

Indiana Ports Sets Cargo Record in 2015

State's three ports handle 12 million tons for first time in 54-year history  INDIANAPOLIS (Feb. 11, 2016) - The Ports of Indiana handled over 12.2 million tons of cargo in 2015,

DP World Bolsters Investment in India

DP World Pvt. Ltd, the world’s fourth biggest container port operator majority owned by the Dubai government, has plans to invest over $1 billion in India for augmenting its port-related operations.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Navigation Pipelines Pod Propulsion Salvage Ship Repair Winch
rss | archive | history | articles | privacy | 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: 0.1622 sec (6 req/sec)