Natural gas prices likely to sit under $7, forecast

The Financial Post is reporting today, that natural gas prices will be between five dollars and seven dollars per mcf, likely for sometime to come.

It is quoting Greg Bay, at Vancouver-based Cypress Capital Management, who says that’s because companies operating in the big U.S. shale basins can make decent returns with prices at those levels.

On this side of the border he predicts consolidation will be an ongoing theme for months to come, with two of the primary areas of focus being the Montney and Horn River plays here in Northeastern BC.

It is generally accepted that to instill confidence in Western Canadian producers, to up their drilling programs, prices of over eight dollars need to be sustained for more than three months.

That noted, the Petroleum Services Association of Canada is now suggesting Western Canadian drilling activity has hit a recessionary plateau. Thus, it has reduced by 50 percent, its year-over-year forecast, for the number of wells drilled this year to 8 thousand…and, it is also estimating next year’s total, will be about the same.

It is basing the 2010 forecast on an average natural gas price of 5 dollars Canadian per mcf.

For the original story done by the Financial Post, Click Here.

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