Natural Gas Intelligence
GasMart 2011: Supply a Given, Demand Will Set Price, Says Bentek Exec

Thursday, May 12, 2011

U.S. natural gas production keeps climbing, and for that to continue burnertip action needs to step up, and it likely will, a Bentek Energy LLC executive told attendees at GasMart 2011 in Chicago on Wednesday.
Producers have shifted their focus to oil and natural gas liquids (NGL) plays given high prices for crude and NGLs. "The market is working. Producers are focusing on higher-value Btu plays," said Bentek Vice President Jim Simpson.

Nearer term, Bentek projects a 2.3 Bcf/d increase in supply this year over last and a 2.2 Bcf/d increase in demand, making the market long 0.1 Bcf/d. He said forward Henry Hub prices have about 80 cents to $1.00 to fall.

For 2011, Bentek is pricing gas at 81 cents below Nymex. For 2012 Bentek's price projection is $1.13 shy of Nymex. Bentek's differential to the screen is $1.00, 91 cents and $1.32 in 2013, 2014 and 2015, respectively, Simpson said.

On the demand side this year in the power generation sector, Simpson said, Bentek expects about 1.8 Bcf/d worth of fuel switching from coal to natural gas. This would be a step up from last year, which saw 1.1 Bcf/d of switching, but it would be less than fuel switching in 2009, which was 2.76 Bcf/d.

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