As Natural gas becomes more of a global commodity, it will increasingly be influenced by crude oil developments, a BP North American Gas and Power executive told the LDC Gas Forum Rockies & The West in Los Angeles on Tuesday.
Now is the time for industry buyers and marketers to be asking if this is the "bottom" for energy prices, said Ben Go, director of structured products in the West for BP, although he was not ready to concede that prices had reached their lowest point.
"Everyone should be asking themselves that question, but there are no guarantees," Go said. "Prices could go lower." He noted that current offers in the forwards market are lower than the lowest five-year strips experienced in the past 15 years.
Go stressed in his keynote remarks, "Trends and Opportunities in the Natural Gas Market," that there needs to be growing attention in the U.S. natural gas industry to global crude oil trends. "I think the natural gas industry is increasingly more global [with natural gas liquids and prospective liquefied natural gas (LNG) exports] and therefore we need to pay more attention to oil," Go said.
The United States last year was the world's largest exporter of oil refined products and natural gas liquids, supplanting Saudi Arabia and Russia, Go noted.
The BP executive emphasized that the near-record level low prices for natural gas could dampen estimated exports going forward. If crude oil stays at the current $45/bbl level, then the Energy Information Administration's (EIA) estimate for 9 Bcf/d of LNG exports will wind up being too high.
"If you can predict what oil prices will be, then you can predict natural gas," Go said. "If prices stay at $45, then I think most people would say that EIA estimate is too high."