Low natural gas prices increasing from recent record low

FORT ST. JOHN, B.C. — The Energy Information Agency is now showing natural gas trading prices increasing from their recent all-time low of $1.93 per million British thermal units in December — right into next year.

It sees the price increase resulting from a classic case of consumption outpacing production, which is a sharp contradiction of the current situation with daily surpluses of about 3 billion cubic feet.

The EIA’s most recent short term energy outlook puts natural gas prices at $2.65 for this year and up to $3.22 next year.

It says the predictions come on the heels of a roller coaster ride of high production and low trading prices, with the CNBC market quote at the end of last week, at just under $2.30 cents.

Production reached an all-time high of 80.2 billion cubic feet per day last September, representing an increase of six per cent from 2014.

However, it’s expected to drop to 0.7 per cent this year, with supply, finally losing the battle to demand, which is expected to continue to expand.

In fact, the latest Exxon Mobile energy outlook plays into the price increase narrative, suggesting ‘all the world’s energy sources will be needed to meet rising demand to 2040 and global demand will grow by 25 percent into that year.’

It also predicts a marked shift toward cleaner fuels — particularly natural gas, and the major part of that charge will be American LNG capabilities.

The key word in that prediction, for B.C.’s would-be LNG industry, is American, as the international competitive stakes remain tremendously high, with the U.S. said to have over 400 trillion cubic feet in proven natural gas reserves.

It should also be noted natural gas optimism is not shared by all analysts, and Charles Robertson 11 and Shawn Lockman at Cowen and Company — the growth-focused New York investment bank — claim to have, “A bad feeling about natural gas for 2016,” and they don’t expect prices to rebound until after 2017.