NG price hits 5-year high

Natural gas closed at $6.15 today. Is this significant for further Marcellus/Utica activity in PA, which has been somewhat neglected since the OH boom began, or will things remain the same? What price point would have to be hit to bring the O&G comapnies back to PA?

 

Here's an article if you want to read about today's high:

http://www.usatoday.com/story/money/2014/02/19/natural-gas-prices-s...

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Permalink Reply by David Perotto on February 19, 2014 at 2:18pm

NYPA,

Absolutely. This price will spur on drilling. The storage of NG is at very low levels, check out the eia report: http://www.eia.gov/naturalgas/weekly/

The need to replenish storage levels will keep the price higher than it has trended the last couple of years. Many of the O&G companies have their cost below the $3 level, some as low as $2. At $6 they will drill more holes, but the price will come down as spring/summer approaches. But it will trend higher than recent levels. REJOICE, MORE DRILLING WILL COME!

Permalink Reply by Erik V. on February 19, 2014 at 3:26pm

Or, the power plants will think twice about switching to natural gas and stay with cheaper coal. 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 19, 2014 at 3:42pm

That has historically been one of the major issues facing long term NG pricing.

Permalink Reply by Mark McGrail on February 19, 2014 at 4:52pm

With the present administration waging a war on coal those plants will eventually be forced to convert or shut down.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 20, 2014 at 4:51am

The problem with conversion to NG is that the supply is not limitless and the stress of added demand will likely push the price past the point where conversion is economical.  It has happened once already, in the 1970's and 1980's, and the increased price did not result in a higher supply as some would have you believe.  

Permalink Reply by Mark McGrail on February 20, 2014 at 6:13am

Marcus, I lived through period s

Permalink Reply by Elnathan Cory on February 19, 2014 at 4:27pm

I think using up a lot of the stored gas will benefit the gas companies in the pocket book which certainly can't hurt their outlook for drilling and pipeline installation.

Permalink Reply by Kathleen on February 20, 2014 at 2:18am
I read an article that said, with the Utica in play and with the wells already drilled in PA the producers should have enough to meet demand. They mentioned the Utica is giving them more gas then expected and that will hurt PA.

Could that happen?
Permalink Reply by Philip Brutz on February 20, 2014 at 6:24am
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 20, 2014 at 6:33am

Neat chart, but it's not terribly useful.  The data is highly skewed because of the brutally cold winter, which has exploded demand.  At some point that orange line is going to dip below the blue one for more than just a three month span.  When it does...

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