Volatility 'Has Pushed Nearly All North American Shale Gas Operators Closer To The Brink Of Failure'


Photo: OklahomaHorizonTV

T. Boone Pickens is not the only one lamenting the state of the natgas industry. While record-low prices have been a boon for consumers, producers have been devastated, according to a Dutch industry expert.

“With output continuing to rise, exceptional price volatility in the U.S. and Canadian natural-gas markets has pushed nearly all North American shale gas operators closer to the brink of failure,” Dr. Ruud Weijermars, director of Netherlands-based Delft Unconventional Gas Program, recently told the Financial Post.

One need only look at Chesapeake Energy to see how this has played out.

While the company has certainly shot itself in the foot in its handling of revelations about CEO Aubrey McClendon’s unusual well transactions, it has been forced to shift to liquid plays as a result of the market.

“Making this transition in just a few years during any time is hard work, but it’s been exceptionally challenging during the time of $2 natural gas,” McClendon said in the company’s Q1 earnings release.

Other natgas players off their 2012 highs include Anadarko (-28 per cent), Devon (-20 per cent) and EOG Resources (-14 per cent) — and those are just the major players.

Natgas prices had been making gains until this week, when the EIA announced upward revisions in reserves and sparking a 6 per cent decline below $2.60. 

Enerplus, a mid-level player based in Canada, told Financial Post’s Yadullah Hussain that prices will have to reach $3.50 per Btu for the company to feel “comfortable.”

SEE MORE: The events that cause natural gas price shocks.

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