American natural gas prices will rebound

In the US, the picture is similar, mostly because of the unprecedented mothballing of rigs, but also due to cost and envirnomental issues, the gas market will rebound sooner rather than later, according to an insider..

Gas recovery coming sooner, not later

Warren R. True
Chief Technology Editor-LNG/Gas Processing

SAN ANTONIO, Mar. 10 — Rapidly declining US natural gas rig counts and prices are setting the stage for a recovery in both sooner rather than later. That was the message today of Gregory A. Dodd, vice-president for natural gas marketing and supply at Devon Energy Corp. in remarks to the 88th Annual Convention of the Gas Processors Association in San Antonio.

Dodd sees signs of this eventuality in the rapid pace that gas rigs are being laid down or otherwise pulled away from US gas plays, especially shale areas. He also said many wells are being completed but not yet tied into gathering and transmission infrastructure.

Today’s fuel
The coming recovery is evident in the accelerating rate of production decline, the increased use of natural gas in electric power generation as falling prices make it more of the fuel of choice, and the inevitable US economic recovery. Devon, said Dodd, is “getting ready for a turnaround” by, in part, increasing its 2009 capital budget over 2008.

Natural gas, Dodd said, is “not the fuel of the future but the fuel of today.” Companies need to be prepared for recovery by reducing debt and reorganizing management structures to speed decision making.

They also need to shorten response times for rig mobilization once recovery begins and be actively influencing policy making, especially at the federal level. Currently, said Dodd, the story of natural gas is not getting told in Washington, DC.

LNG will play a critical role, he said, in meeting demand in the recovery, as it will take US production companies 6 months from the time rigs are called back to work and increased production from that new work.