Natural gas woes bigger story than crude oil Mella McEwen Oil Editor Midland Reporter Telegram 09/25/2005
Having seen his prediction that crude oil prices would reach $65 a barrel become reality, Dr. Michael Economides is making equally bold predictions about natural gas.
Natural gas prices, he said Wednesday while visiting Midland to address the Permian Basin section, Society of Petroleum Engineers, will reach $20 per thousand cubic feet (Mcf) around Christmas.
Having forecast $65 oil, he said, he's now predicting $100 oil "but I'm not impressed with that. Natural gas is the real story."
Economides, professor at the Cullen College of Engineering at the University of Houston and managing partner in a petroleum engineering and strategy consulting firm, lists several reasons for his expectations of high energy prices.
One is the "perfect storm" of Hurricanes Katrina and Rita. Rita's approach has, as of Wednesday afternoon, knocked out 73 percent of the Gulf of Mexico's oil production as personnel were evacuated from offshore rigs and production platforms. On Tuesday, the U.S. Minerals Management Service survey of Gulf of Mexico natural gas wells found that 3.3 percent of gas production has been shut-in as a result of Hurricane Katrina three weeks ago.
There is, he said, 3.5 million cubic feet of Gulf of Mexico natural gas production off-line that likely won't be back on the markets by Christmastime.
"What's going to happen is we're going to have a huge shortfall of natural gas and around Christmas there will be a bad present for the Midwest," he observed.
That comes at a time, Economides said, when the nation is transitioning from crude oil to natural gas use and domestic production is already struggling to meet rising demand.
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