Over the next dozen years natural gas prices will average $3.50-60, given $22-$28/bbl oil, according to a base case scenario developed by the New York-based PIRA Energy Group as part of its just-released, in-depth study of the global oil and regional natural gas markets.
Mark Schwartz, new head of the PIRA’s Scenario Planning Group, said the base case outlook for gas assumes “very gradual growth in production over the long term” for North America, including an increase in deepwater Gulf of Mexico and coalbed methane gas offsetting declines in traditional production. It assumes LNG imports will increase to the 10-12 Bcf/d range, but the Alaska pipeline will not be built during that timeframe. Schwartz expects the Mackenzie Valley pipeline to be built before 2010.
Schwartz, who had been chief economist at Exxon, said the PIRA Group has included alternate scenarios that include actual production declines and the possibility that construction of some LNG receiving terminals could be blocked by environmental groups. In that case the gas price would be higher.
PIRA’s oil price prediction is based on “strong economic and oil demand growth, continued growth in non-OPEC production and an OPEC committed and able to defend the crude price in a band similar to today’s prices.” A lower-priced scenario could result if the world economies and demand fail to pick up. A higher-priced scenario would result from a decline in non-OPEC production.
In addition to the recent 200-page study, PIRA’s Scenario Planning Service features quarterly tracking reports, analytical bulletins of current events, customized scenario building and subscriber workshops. Questions about the service can be directed to Schwartz or Jeff Steele at (212) 686-6808. The website is www.PIRA.com.
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