Rising natural gas prices would give a nice boost to RRS'...

Rising natural gas prices would give a nice boost to RRS' revenues, especially in Georgia as gas will be sold to local towns...
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Chevron says US gas price needs to rise

By Ed Crooks in New York
Published: March 15 2011 02:57 | Last updated: March 15 2011 02:57
Natural gas prices in the US need to rise significantly for the industry to be sustainable in the long term, a senior executive at Chevron has said.

The boom in production of gas from shale rocks and other sources that have not traditionally been economically viable has driven prices down to about $4 per million British thermal units.

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George Kirkland, Chevron?s head of oil and gas exploration and production, said the industry needed prices ?in the sixes and sevens? in the long term to cover the cost of investment.

He was speaking as Chevron set out a plan for a 20 per cent rise in oil and gas production by 2017, giving an annual average growth rate of about 2.5 per cent, more than twice its rate of growth over the past seven years, as large new projects such as the $37bn Gorgon liquefied natural gas project in Australia come on stream.

Chevron has also made its first significant move into US ?unconventional? gas, paying about $4.7bn including debt for Atlas Energy, which has reserves in six states, including Pennsylvania, Ohio and New York.

However, Mr Kirkland suggested that Chevron would not be rushing into more deals.

?We?re very economically driven,? he said. ?We have a very good queue [of assets to develop], we have the ability to work within our existing queue for a long period of time, so we?re very selective on where we?re going to invest in new opportunity sets.?

He also cast doubt on the economics of the US gas industry, saying that with gas at $4, it was hard to invest.

?What should be happening in the US at this point in time is that only the very best shale gas and conventional opportunities are being developed. I don?t believe that is necessarily the case,? he said.

He said some companies had bought into gasfields and were drilling wells and producing gas in order to meet the terms of their leases, and ?at some point we?re going to be beyond that, and market forces definitely will control supply and demand?.

Gas at $6 per mBTU would be ?pretty darn cheap?, he said, equivalent to an oil price of $36 a barrel, compared with a US crude price yesterday of about $102.

He said it was too soon to say whether the problems of Japan?s nuclear industry would create a greater demand for fossil fuels in the long term, but said Chevron was ?very bullish? on the outlook for its Australian LNG projects Wheatstone and Gorgon. Their production will be targeted at Asian markets.

http://news.bbc.co.uk/1/hi/world/europe/4659826.stm