Predict

Constricted and expensive capital markets have not stifled natural gas pipeline development, and analysts predict projects generally will move forward, driven by producers’ need to get gas to market and supported by investors’ appetite for “more reasonable returns and greater certainty.”

Constricted and expensive capital markets have not stifled natural gas pipeline development, and analysts predict projects generally will move forward, driven by producers’ need to get gas to market and supported by investors’ appetite for “more reasonable returns and greater certainty.”

At this stage, it’s still difficult to predict how much damage Hurricane Gustav may inflict on natural gas infrastructure on- and offshore along the Gulf of Mexico. However, the increase in gas production onshore in the past few months has led to a “sudden loosening of the supply and demand balance,” which was evident in storage data issued by the Energy Information Administration, Lehman Brothers analysts said in a recent report.

Longer term, analysts at the Federal Reserve Bank of Dallas predict “much higher natural gas prices,” despite a “sizable” inventory of undeveloped domestic resources.

Longer term, analysts at the Federal Reserve Bank of Dallas predict “much higher natural gas prices,” despite a “sizable” inventory of undeveloped domestic resources.

With the energy industry glued to storm forecasting models in the attempt to predict Hurricane Dean’s path early this week, the natural gas futures market had upward pressure on it throughout Friday’s session. After trading above $7 three times during the week, the September contract was actually able to settle above the psychologically important line for the first time on Friday at $7.010, up 13.5 cents on the day and 19 cents higher than the previous Friday’s close.

While near-month futures spiked to an all-time high Tuesday of $14.338 and the 2006 strip stands at $11.93, two analysts predict the gas market will scale back down by about 33% next year to range between $7.15 and $8/Mcf after the hurricane recovery is complete. They said prices should remain just above $6 over the long term.

Public hearings on the C$7 billion Mackenzie Gas Project have been postponed for at least two months, with the sponsors adding they cannot predict how long the delay will turn out to be for Canada’s arctic development. In a letter to the National Energy Board, senior Mackenzie partner Imperial Oil Ltd. said the project will not be ready for hearings that were planned for late summer or early fall.

Both Energy and Environmental Analysis (EEA) and Energy Ventures Analysis (EVA), two Arlington, VA-based energy industry consulting firms, predict that natural gas prices will be pressured lower this year — EEA says possibly as low as $4/MMBtu by the end of the gas storage injection season.