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U.S. utilities have withdrawn a record amount of natural gas from underground storage to meet heating and power needs during an extremely cold winter, but gas producers say they are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 July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Asia-N.Europe Box Rates Fall 8.1 pct

Freight rates for transporting containers from ports in Asia to Northern Europe fell 8.1 percent to $713 per 20-foot container (TEU) in the week ended on Friday,

Unipec: U.S. ANS Destined for Sinopec

Arbitrage opens after ANS discount widen on ample supplies. Unipec, the trading arm of top Asian refiner Sinopec, has bought two U.S. crude cargoes, including

G6 Updates Asia-North America West Coast Service

Two services will be merged into one until further notice / Reason is change in market demand / All other services remain unchanged. Members of the G6 Alliance

Energy

Ithaca’s FPF-1 platform to be moved to Stella field

Ithaca Energy Inc. reports that the "FPF-1" floating production facility has completed the required inclination test as planned and departed the Remontowa shipyard in Gdansk, Poland.

Libya's PFG to Lift Terminal Blockades

Petroleum Facilities Guard has blocked terminals for months. Ras Lanuf, Es Sider terminals damaged by fighting. Libya's Petroleum Facilities Guard (PFG) will

Unipec: U.S. ANS Destined for Sinopec

Arbitrage opens after ANS discount widen on ample supplies. Unipec, the trading arm of top Asian refiner Sinopec, has bought two U.S. crude cargoes, including

LNG

Ship of the Year Award for NYK Vessel

Japan's first LNG-fueled ship, Sakigake, which is a tugboat owned by NYK has been recognized with a Technology Special Award at the 2015 Ship of the Year Awards

First U.S. LNG shipment to cross expanded Panama Canal

The United States will ship its first liquefied natural gas (LNG) cargo through an expanded Panama Canal next week.   The waterway shaves distances between export

GTT Cuts Outlook on Ship Construction Delays

French supplier of systems for marine transportation of liquified natural gas (LNG) Gaztransport & Technigaz (GTT) reported strong growth in its first half results

Logistics

Team Britannia, GAC Inks Partnership Deal

As Team Britannia prepares for its bid to break the round-the-world powerboat record later this year, GAC has been named their official shipping and logistics partner.

Libya's PFG to Lift Terminal Blockades

Petroleum Facilities Guard has blocked terminals for months. Ras Lanuf, Es Sider terminals damaged by fighting. Libya's Petroleum Facilities Guard (PFG) will

Unipec: U.S. ANS Destined for Sinopec

Arbitrage opens after ANS discount widen on ample supplies. Unipec, the trading arm of top Asian refiner Sinopec, has bought two U.S. crude cargoes, including

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Ship Electronics
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: 0.0791 sec (13 req/sec)