HOUSTON — Natural gas prices aren’t going to surge any time soon, panelists said at a Houston forum Tuesday, which could be good news for consumers adopting the fuel source as an alternative to gasoline and diesel — but not necessarily welcome news for producers.
“2015 is going to be bad for gas,” said Dan Pickering, co-president of the energy investment firm Tudor, Pickering Holt and Co., at the forum hosted by the law firm Winston & Strawn.
Since the middle of 2010, the spot price for domestic natural gas generally has remained under $5 per million British thermal units, except for a spike during unusually cold weather earlier this year.
That’s not likely to change, Pickering said.
T. Boone Pickens — the billionaire Dallas energy financier who has become a vocal advocate for natural gas as a motor fuel — agreed, saying he doesn’t expect natural gas to hit significantly higher price levels in his lifetime.
“I don’t think I’ll ever see $10 gas,” said Pickens, who is 86. “When you look at parity… $100 oil is $16 natural gas. Natural gas is a cleaner fuel than oil.” In other words, he said — hammering home a familiar message — natural gas is a clear winner.
The panel, which also featured former Houston Mayor Bill White, a deputy energy secretary in President Bill Clinton’s administration, weighed in on policy questions as well.
Topics included the future of the proposed Keystone XL Pipeline linking Canadian oil sands with the United States. It still awaits key federal approvals after years of debate among industry, labor and environmental interests.
White said he supports the Keystone XL, but also noted that despite the political hurdles facing that project, the American pipeline sector overall is booming.
“We’ve seen more pipeline construction in the U.S. over the last seven years than in the history of the history of the United States,” White said.
“I’m not saying this to minimize the significance of Keystone or anything,” White said, “but by historical standards, we’re moving pretty fast on midstream.”
Pickering said he doesn’t expect the boom in production from shale to slow in the near future. “The next big thing is the current big thing,” Pickering said. “We’re 10 years into the shale story… and it’s probably a 20-year or 30-year thing.”
Panelists also discussed the recent decline in crude oil prices. Brent crude, the international benchmark, ended Tuesday trading at $96.85 per barrel, and U.S. benchmark West Texas Intermediate finished at $91.56. Both were above $100 just a few months ago.
Earlier this month, Brent fell to its lowest price in two years, influenced by slowing demand and a flood of supplies. “We now have too much oil, and the price of oil has gone down $10 or $15 a barrel,” Pickens said.
If price slip much further, he said, “they’ll lay some rigs down (and) activity may slip here in the near future.” But Pickens said he is optimistic for the longer-term prospects for U.S. production.
Pickens said he doesn’t think hydraulic fracturing — the process of shooting water, sand and chemicals into oil and gas wells to simulate production — will face increased bans in the U.S. , and he said he was “amused” by New York state’s ongoing moratorium on the practice.
“Nobody’s come up with a problem yet,” Pickens said. Opponents say fracturing may pollute sub-surface water.
Pickering said the industry should do a better job responding to the criticism. “What we can’t ignore is nobody really wants a well drilled near their house,” Pickering said. “In certain areas, people would rather have a pristine location than money.”
“I think the industry has a perception problem,” he added. “It’s going to be tough to get past that. If energy wasn’t cheap, it would be really tough.”