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Permalink Reply by Skip Peel - Mineral Consultant on July 5, 2019 at 9:13

Generally the best areas for natural gas prices are in proximity to supply with little connection to markets.  That's how you get some mid-Western states near the Bakken (N. & S Dakota, Nebraska, Wyoming) and some states near the Utica/Marcellus (Illinois, Ohio) with lower than average prices.  Both those basins have logistical problems with getting gas to hubs with higher demand.  If Texas was just the WaHa hub in west Texas, it would also be among the lowest.

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Permalink Reply by Skip Peel - Mineral Consultant on July 7, 2019 at 9:24

Correction. Generally the worst areas for natural gas prices are in proximity to supply with little connection to markets. That's how you get some mid-Western states near the Bakken (N. & S Dakota, Nebraska, Wyoming) and some states near the Utica/Marcellus (Illinois, Ohio) with lower than average prices. Both those basins have logistical problems with getting gas to hubs with higher demand. If Texas was just the WaHa hub in west Texas, it would also be among the lowest.

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Permalink Reply by Max on July 8, 2019 at 1:49

Skip, I guess the "best" or "worst" depends on if you're the seller or if you're the buyer.  Either way, it looks like the mineral owners will have to get use to low prices for some time to come.  

More access to supply should drive prices down for consumers even more.  We'll probably see "free NG" in many areas with consumers paying only delivery cost.

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Permalink Reply by Skip Peel - Mineral Consultant on July 8, 2019 at 2:10

Max, the key to wide adoption of natural gas is a low, stable price.  Before the fracking revolution, the primary complaint for not adopting natural gas was its price volatility.  And thus there were fewer pipelines connecting end users.  I worked as an inventory inspector on a long distance Texas Eastern transmission pipeline in the mid-70s in West Virginia and Pennsylvania.  There were no, as in zero, residential or commercial users tied into the 80 miles of line I worked on and no plans for any.  The line was headed to east coast industrial customers. 

Now that climate change concerns are serving to get rid of coal, domestic natural gas use will increase.  Increased exports by pipeline and LNG will help support the price.  It simply appears that for the near term as demand increases, supply will always be ahead.

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Permalink Reply by Max on July 8, 2019 at 2:37

Skip, I do remember the high NG prices back in the 70's.  The power company that I worked for switched to coal because of those high prices and other factors. 

There were times that some of the gas units couldn't be started up because the gas utilities had to supply gas to residential customers before industrial customers and there wasn't enough for everybody.

The company would buy a set amount of gas each year and hoped that there wasn't too many hot days in August.  If they still had some gas left from the summer, they would schedule our shutdowns according to how long they could run those gas units.

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Permalink Reply by William C. Morrison on July 20, 2019 at 7:24

In Louisiana it is the "Henry Hub" where 12 pipe lines converge, some going out and some coming in.  It is where all off shore gas comes into the system.  Prices of wholesale gas very with weather conditions principally in the Eastern seaboard of the US.  We learned a lot of the Louisiana gas is already committed to eastern markets and not available to the locals.  One of the biggest on shore gas fields ships all of its gas elsewhere and thus the people living right on top of it can not get it.

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