US gas producers shrug off low prices

HOUSTON: Energy executives say they are looking past current ultra-cheap gas prices and betting on a coming wave of new liquefied natural gas (LNG) plants to lift demand – and prices – for the fuel.

Natural gas prices have fallen by onethird this year, undercut by a warmer winter, outages at LNG facilities and higher-than-expected output.

The growth in solar and wind power and a pause on new US LNG export permit reviews also have clouded the outlook for future gas demand.

“Domestic US markets are oversupplied,” said Chad Zamarin, a senior vice-president at gas pipeline operator Williams Cos.

“It will certainly take some time for LNG coming out of the United States and a bit of a slowdown in supply to rebalance,” said Zamarin, speaking on the sidelines of the CERAWEEK energy conference in Houston.

Oversupply in West Texas, home of the top US oilfield, had prices this week at a negative 26 US cents per million British thermal units (mmbtu), requiring gas producers to pay someone to take the fuel.

US gas prices were trading at US$1.66 per mmbtu on Friday, down 74% from the average price in 2022.

“Our pipeline infrastructure is maxed out. It’s going to make it very difficult for us to connect markets,” said Toby Rice, CEO of the largest US gas producer, EQT Corp. He said permitting reforms are needed to build new lines.

New pipelines and LNG processing plants would allow the US to export the gas now clogging those West Texas lines and supply sustained energy while sun and wind power grow.

China and India are moving away from coal to natural gas for electric power, and Europe has turned to the United States to replace Russian pipeline gas.