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Is there a slowdown of natural gas
in the U.S.?
Natural Gas Slump Will Slow US Supply Growth, Fracker
EQT Says
By
Paul Wallace and Anthony Di Paola, Bloomberg
News
Jan
17, 2023
![](images/images_05_23_2023/image1.png)
(Bloomberg) -- A plunge in natural gas prices
will slow supply growth in the US this year, according to the
country’s biggest producer of the fuel.
Gas futures have dropped in the US and Europe in recent weeks, largely
because of abnormally warm winter weather. US production has also
continued to increase.
Predictions among some in the industry that US output will rise this
year by another 3 billion cubic feet a day, or roughly 3%, will
probably turn out to be incorrect, according to Toby Rice, Chief
Executive Officer of EQT Corp.
“That’s a little ambitious with the current pullback and prices,” he
said in an interview over the weekend. “You are going to see an
operator response and slow down in the activity levels.”
US prices have fallen 16% this year to $3.75 per metric million
British thermal units. They were almost double that as recently as
late November.
The disruption to global flows caused by Russia’s invasion of Ukraine
and decision to cut supplies to Europe means gas will continue to
whipsaw in the medium term, Rice said.
“It’s been a little bit over-sold,” he said in Abu Dhabi, capital of
the United Arab Emirates, where he was attending an Atlantic Council
conference. “But this is the world we’re going to be living in — a
significant amount of volatility, especially when we are
energy-short.”
Another problem for gas firms is that inflation in the industry is
still high, making it expensive to hire drilling workers and
equipment.
“Inflation has not reacted,” Rice said. “So, we’ve got a couple big
forces that are working against producers.”
Pittsburgh-based EQT fracks gas from shale rocks in Pennsylvania, Ohio
and West Virginia. It’s pumping almost 6 billion cubic feet a day and
expects that figure to remain flat this year, Rice said.
Broken Markets
He reiterated that a shortage of pipelines in the US exacerbates the
company’s ability to raise production. Environmental activism has led
to several pipelines being delayed or canceled in the past five years.
“The gas markets in the US are broken,” he said. “And what’s broken is
lack of pipeline infrastructure that connects the low cost supply that
we have with the demand. We still see pockets in the US where natural
gas prices are higher than what they’re paying in Europe. It’s crazy.”
European prices are around $21 per mmbtu, even with their recent drop.
That’s more than five times the cost of benchmark gas in the US.
Gas should be seen as a clean source of energy as not lumped together
with oil and coal, said Rice. While gas is cleaner than those two, it
still emits carbon when burned and methane leaks are common in the
industry. Many climate activists are against its use and say
governments should phase it out as a fuel for generating electricity
and heating homes.
The US government’s climate envoy, John Kerry, said to Bloomberg on
Sunday that gas can play a role in slowing the planet’s warming, but
only if producers accelerate efforts to capture their carbon
emissions.
With more pipelines, the US has the potential to eventually increase
gas exports six-fold to 60 billion cubic feet daily, Rice said.
“That is the energy equivalent of adding 10 million barrels a day of
clean energy to the world stage,” he said. It would allow the US to be
the “swing producer for energy” markets, he said.
EQT has no plans to tap the bond market again following a $1 billion
deal in September, which helped fund the acquisition of competitor THQ
Appalachia I LLC. The company will look to raise its shareholder
payouts further, according to Rice.
“We are going to be a dividend grower over time,” he said.
©2023 Bloomberg L.P.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
exactrix@exactrix.com
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