Thursday, October 7, 2010

Natural Gas Prices Too Low to Sustain Production

For U.S. energy producers, high priced $11 natural gas is "kind of like a Saturday night drunk," Devon Energy Executive Chairman Larry Nichols said at the opening session of the Unconventional Gas International Conference and Exhibition on Tuesday afternoon. "It may feel good at the time," he said, but it isn't a sustainable high.

Just as an $11 price is too high to persist, today's current market prices of about $3.75 are too low for the industry to thrive and maintain strong natural gas production in the long term, said Nichols, who stepped down this year from his longtime position as CEO of Oklahoma City based Devon, the leading producer in North Texas' gas rich Barnett Shale.

Even in the face of low gas prices, domestic energy producers have continued to do substantial drilling, particularly in major unconventional gas plays such as the Barnett, the Eagle Ford Shale in South and Central Texas, the Haynesville Shale in Louisiana and East Texas, and the Marcellus Shale in the Appalachian region. By continuing to drill despite weak prices.....Read the entire article.

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