It's time to party like its 2002 if you're a consumer of
, as the fossil fuel dropped below $2 for the first time in a
At the end of Wednesday, April 12, the price was at $1.984 per
thousand cubic feet, reports
The Associated Press
. This is a 59 percent drop from the $4.85 price natural gas
enjoyed last summer.
The price of the hydrocarbon has been pushed down by a sharp
increase in production in the U.S. over the past few years. This
is in large part attributable to the hydraulic fracturing - or
fracking - boom, which has pushed America past Russia to claim
the title of the world's leading natural gas producer, despite
having reserves only 16.25 percent the size of the vast
European-Asian nation, according to the
U.S. Energy Information Administration
This glut in supply - American storage facilities are
reportedly holding 60 percent more natural gas than is typical-
combined with the very mild winter pushed the price down. This
isn't only good for consumers but for manufacturers as their
energy expenditures will drop.
"If you're a consumer, this is great news," petroleum analyst
Stephen Schork told the AP. "This could spark a real rebirth of
However, this isn't such great news for the companies that are
producing the natural gas.
) reached a low of about $20.05 per
late on Wednesday after being close to $22 early on Tuesday.
Canada-based Encana Corporation (
) hit a low of about $17.95 per share on Wednesday, down from a
peak of $18.68 on Tuesday. Apache Corporation (
) was as low as $92.76, a drop of nearly $2 from the $94.74 high
earlier in the day.
Apache is looking to turn the table and take advantage of
these low natural
by converting a rig to run on liquefied natural gas (
"What we need to do is increase the amount of natural gas
demand in this country," Apache CEO Steve Farris told the news
source. "From an economic standpoint, it's a no brainer."
Encana for its part is reportedly in the process of converting
some of its more than 40 rigs to run on
; 15 of them already do.
The future of natural gas in the U.S. may depend on expanded
exports of LNG. Natural gas is turned into a liquid by cooling it
to minus 256 degrees Fahrenheit. This liquid is just 1/600th the
size of natural gas, making its transport much more
Prices for natural gas in Japan - which is far and away the
largest importer of LNG in the world - have been around $15 per
1,000 cubic feet, making it an attractive potential
for U.S. LNG producers.
However, liquefying natural gas and sending it overseas is not
exactly easy. A number of groups have spoken out against
exporting the fossil fuel. For instance, environmentalists
believe it would encourage further fracking operations, which
they view as harmful to the environment.
More practically, the
in creating a facility that can send LNG overseas is massive.
According to Unit
, a full LNG export supply chain - which includes production,
pipelines, a liquefaction facility and port - can cost $3 billion
per million annual tons of natural gas. Due to these costs, as
well as regulatory factors, creating an LNG export terminal takes
Still, companies in both the U.S. and Canada have been
attempting to move forward with various LNG projects as many
analysts believe natural gas prices will only dip further this
summer and may not see a rebound until next year, according to
The Wall Street Journal