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Hope for Natural Gas Recovery?

Wednesday, October 09, 2013

Bentek Energy, the oil and analytics group of McGraw-Hill Financial's Platts unit, has just released its 10-year outlook for the Utica shale. It's a whopper of unparalleled data and analysis, and it doesn't shy away from conclusions. Two make our headlines today.

Not only will the usual natural gas production and consumption map turn upside down in the next 10 years, according to Bentek, but also, natural gas prices will rise 9% by the end of the period. Given even tiny inflation, that's flat, or down, in real terms.

Rocco Canonica, Bentek's director of energy analysis and lead author of the outlook, stated, "The Northeast is poised to switch from the nation's largest demand region to a net supply region, and the U.S. Southeast is racing to become a much larger net demand region after being a major supplier to the U.S. gas market."

This is due to the explosion of natural gas coming online in the Utica and Marcellus shale plays. Together, these cover a massive area of Ohio, Pennsylvania, and south into West Virginia. Because production there is growing so quickly, there will be so much more gas production than needed for rigid northeast winters and hot summer demand, that to make money, producers will have to find markets elsewhere.

Fortunately, Bentek Energy says demand will increase in the Southeast.

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