Not to upset anyone reading this blog that is living in the ridiculous snowy weather right now, but I am currently in jeans & tank top. So I cannot imagine the inconveniences you are experiencing with your current weather. Being that I work for a natural gas processing company, I am constantly reading about pricing for oil and gas. I was quite surprised to see that the price of natural gas has stayed low even with all of the snow that parts of the U.S. have received.
Naturally, the trend for natural gas pricing is for it to ramp up way before the retailer gets a chance to put out the Thanksgiving decorations. Drillers and producers will stockpile the natural gas so that it is ready for fall and winter. This allows the traders and companies who sell the natural gas to businesses & residents, time to begin to make heavy purchases. By the time it gets into the the worst parts of winter, sellers can meet the demand of the consumer. With the ‘Polar Vortex’ that hit last year we did have a late spike in pricing because of all the snow.
So with the obnoxious amounts of snow hitting Americans in the north and northeast and freezing afternoon temperatures as far south as Atlanta, why are there no issues with the price of natural gas going up? Well, I will tell you…
Once again, it’s all about the shale! Horizontal drilling, unconventional resources, fracking, whatever adjective you want to use, that is the reason why. Companies have figured out how to maximize the natural gas in the shale plays around the United States. With the heavy snow that hit last year, natural gas was stored heavily to ensure that there would not be a lack of supply. Even with the crazy weather, we have had above average temperatures in the western part of the US so that brings the national demands average down. Per eia.gov, “withdrawals of natural gas have been significantly less than last winter and 16% less than the five-year average.”
High production and lower demand would of course equal lower prices.
So will oil and gas companies continue the push in these shale plays? It seems so. Rig counts may be down with the low price of crude. However, we are not the only country that uses natural gas. Exports are still moving with the instabilities in Russia. It may be a slow climb but still a climb. With oil rig sites utilizing the natural gas coming in with crude to power generators the need for natural gas is not going anywhere. The price will just be one of those things I will always be interested in.
CROFT’s Fuel-Gas Conditioning System is a unit that is built to help companies utilize natural gas to fuel generators and instrumentation.
