Outlook remains positive for natural gas use

10/30/2013 1:00 AM

10/29/2013 4:23 PM

The natural gas industry, overcoming previous concerns about growth in demand, is increasingly optimistic about its future, according to Black & Veatch.

Feeding the confidence are expected increases in the amount of the fuel used to generate electricity, along with tapping more for fuel-efficient vehicles, and the exporting of natural gas to other countries.

“The industry feels very good across the board,” said Peter Abt, managing director of Black & Veatch’s oil and gas strategy practice.

That’s one of the conclusions in the Overland Park company’s annual report on the natural gas industry. The findings are based partly on a survey of 336 people in the industry. More than 95 percent of those responding said they are optimistic or very optimistic about the outlook for the industry.

The country’s natural gas industry has rebounded in recent years with horizontal drilling and fracking practices, which have allowed for the recovery of the fuel from underground shale formations. But producers curbed production when prices plummeted, as demand didn’t keep up with available supplies.

According to the report, there is a sweet spot for prices that would be higher than in recent years but not as volatile as in past years. Natural gas has in recent months been trading under $4 per 1,000 cubic feet. Black & Veatch is projecting that average prices will rise to $5.99 by 2020.

Demand will be pushed by using more natural gas in power generation, which the report projects will nearly double by 2020. Even with a rise in prices, natural gas will continue to have an advantage on coal because it burns cleaner and is better able to meet environmental regulations.

Shipping natural gas to overseas markets also is expected to rise as facilities — originally built to import the fuel — are retrofitted for exporting. U.S. natural gas will have a competitive price advantage in the international market.

The report also said the use of natural gas in commercial vehicles is beginning to gain traction and will play a large role in natural gas demand.

“The future is bright,” said Abt.


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