David Pursell, a managing director for research for the Houston-based energy investment firm of Tudor, Pickering, Holt & Co., said it is forecasting that gas prices will rebound to $7.50 in 2010— more than double what prices have been for much of this year. Gas prices are stated either for 1,000 cubic feet or an energy level of one million British thermal units.
Gas prices made a big jump Tuesday in futures trading on the New York Mercantile Exchange, closing at $4.88 per million BTU, up $1.15, in contracts for November delivery. Prices had dropped moderately in trading this morning.
Gas prices have crashed in the past 14 months from peak levels above $13.50 in July of 2008. Correspondingly, the number of U.S. rigs drilling for natural gas totaled only 710 last week, less than half the 1,559 a year earlier, the Baker Hughes oilfield services firm said.
Gas supply has outstripped demand as a result of the economic recession and “shalemania” — an explosion of drilling activity in shale gas plays such as the Barnett Shale in North Texas, Pursell said in a speech at the Unconventional Gas International Conference and Exhibition at the Fort Worth Convention Center.
Don Warlick, president of Warlick International, which bills itself as an “energy intelligence” firm, also was bullish on natural gas, telling conference attendees that future demand should rise because its ample supply and the movement toward cleaner energy should increase its desirability as a fuel for electric power generation.
Wind and solar power can’t be counted on to substantially increase base loads and peak loads for power generation, and the time when new nuclear power plants might come on line is “a long way” away, Warlick said.
Yesterday’s big jump in the futures price was “very encouraging,” he said.
The commodities research unit of Barclays Capital was significantly less bullish in a new report issued today, however, lowering its 2010 gas-price forecast to an annual average of only $5.05 per million BTU as a result of contined weakness in power demand.
--Star Telegram