Natural Gas – Disinvestment, Exports Could Spur Higher Prices

In recent months, most laundry operators probably haven’t worried too much about energy costs, since natural gas prices have hovered for much of the year at or near all-time lows, bottoming out last month at $2.10 per MMBtu (1 million British thermal units). However, a combination of factors, including disinvestment in well infrastructure due to limited ROI, brisk demand and growing exports could draw down surpluses. That, in turn, could lead to dramatically higher prices in the near term, according an article published by TRSA associate member APPI Energy.

Adding to these uncertainties is the possibility of an economic downturn in the next year or two. In that scenario, investors would likely spend even less on new natural gas drilling projects, while deferring on maintenance of existing wells wherever they can. These moves could contribute to higher natural gas costs for consumers – possibly much higher. “With profitability pressure, the natural decline of a well’s life, production softening and investors most likely tightening their wallets, it is likely that pricing will spike to possibly double or triple pricing of close to the $4 per MMBtu range in the future,” the article said.

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