U.S. Gas Prices May Stay Below $6 for a Decade, Trade Group Says

U.S. natural gas prices may stay in a range of about $4 to $6 per million British thermal units during the next decade even if exports of the heating and power plant fuel expand, the American Gas Association said.

“If you look at the amount of gas that we have and the known resources and known reserves and the ability now to extract that almost on call, we do not see exports as affecting the price over time,” Dave McCurdy, chief executive officer of the gas association, said in an interview in Houston today.

McCurdy’s association, which includes gas utilities, is helping to put on a conference on liquefied natural gas, called LNG 17, this week in Houston. Many association members see U.S. exports reaching about 3 billion to 5 billion cubic feet a day in the next decade, he said. Companies have proposed about 30 billion cubic feet of daily U.S. gas export capacity amid a surge in output as producers fracture shale formations.

The government is reviewing applications, with Cheniere Energy Inc. (LNG) owning the only project in the lower 48 states that has all approvals for LNG exports. Dow Chemical Co. (DOW) has questioned how LNG exports may affect operations in the U.S. Dow is a member of America’s Energy Advantage, a group of manufacturers and gas distributors that says unfettered exports of LNG may undermine the benefits of rising output from shale.

‘Sweet Spot’

Gas futures in New York are trading at more than $4 per million British thermal units this week after falling to less than $2 in April 2012 and touching a 10-year low.

The American Gas Association’s members generally support open markets and the concept of free trade, McCurdy said.

Trying to keep gas in the range of $4 to $6 makes sense because it’s a “sweet spot” that provides a motivation to produce while making sure gas is a “value” for customers, Ronald Jibson, CEO of Salt Lake City-based Questar Corp. (STR) and chairman of the American Gas Association, said today in an interview in Houston. Less volatility in future gas prices also will help companies such as power producers and manufacturers plan, he said.

“You still have potential for small swings, but I think they’ll be very small duration as far as the timing,” Jibson said.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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