Everybody agrees there is a current glut of natural gas in the U.S., but not everybody agrees on the right response to it. About 2,000 industry members attending the Hart Energy conference in Fort Worth on Wednesday heard one producer and a consultant advocate pursuing numerous measures to boost demand, including exports, while a big user, Dow Chemical, cautioned against the use of government subsidies to accelerate new demand, such as natural gas-fueled vehicles and coal-to-gas switching at electrical utilities. Ken Bromfield, U.S. commercial director at Dow, said his company just committed $4 billion to new facilities, including a new ethylene plant in Louisiana, based on abundant natural gas supply and low prices, which he said give U.S. chemical producers and manufacturers a big advantage over European and Asian competitors. Rather than push exports of liquefied natural gas (LNG), Bromfield said, "I'd rather export it as value-added products." John Harpole, president of Mercator Energy and a consultant who said he works with both buyers and sellers of natural gas, countered that there's enough gas to do all of the above and still keep prices relatively low.
Several participants agreed that producers have not been inclined to sign long-term contracts at today's $2 price level, the lowest in a decade, although Harpole said he thinks producers' willingness to deal long-term is growing as it appears the glut will prove longer-lasting. David Hill, vice president of Natural Gas Economy at Encana, said a big user that wants to lock in supply at low prices can do so by committing the money to take an interest in production, as one steel company has done. "It's happening," Hill said of such arrangements. The conference ends today.
-- Jim Fuquay
