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Natural Gas' Comeback

Written By Brian Hicks

Posted June 24, 2009

With natural gas prices this low, it’s slowing drilling and hindering future supply. There’s a huge amount of reserves, but the problem is that we can’t convert those huge shale reserves (which boosted domestic production by 9% last year) into production. So every day nat gas sits below… say $5/mcf… we’re delaying that production. As the economy improves and our industrial demand picks back up, that’s going to put another crunch on available supply, causing prices to shoot back up.

Also, if we’re expecting natural gas to play a larger role in our energy picture—like transportation— we’re going to HAVE to develop unconventional shale plays like the Marcellus formation, which puts us back into that upcoming supply crunch. Natural gas companies will also benefit from overall energy moves, like oil.

Ian Cooper, with an assist from Energy and Capital’s Keith Kohl