Global Natural Gas – Interesting Trends have investment implications
A by-product of very weak US natural gas prices, cheap chemical feedstocks, is taking hold as the US is probably the second lowest cost producer of commodity chemicals in the world, next to the Middle East. Meanwhile, Saudi Arabia’s decade long quest for natural gas has reached an interesting stage. After five years of exploration, a few viable ‘non-associated’ (independent of oil production) projects are under consideration for development (gee, sounds a little like the US Haynesville!). Unfortunately, the wellhead prices necessary to justify investment mostly range from $4-6/mcfe — a lot like the better US basins. While prices are weak (too much LNG) today, natural gas is getting more expensive to develop almost everywhere but in the US. The ‘Golden Age of Chemicals (1960s and 1980s),’ featured 20-1 oil/gas ratios.