Natural Gas Overflow Slows Business

Posted on April 9, 2012


Natural gas everywhere and not a place to put it.


The U.S. natural gas market is pushing the limits of production. There is so much natural gas being produced in our country that soon there might not be any place left to put it. After years of explosive growth, natural gas producers and finally retrenching.


Due to a warm winter and the lack of demand for home heating, the underground salt caverns, depleted oil fields and aquifers of America are filling up quick. The flood has favored businesses and home owners that use natural gas, but for companies that produce the fuel, a ten year low is being followed by an 11th. Stock prices are falling in anticipation of declining profits and scaled back growth plans, so much so, that some of the nation’s biggest producers are announcing plans to slow down.


But so far the efforts of companies like Chesapeake Energy, ConocoPhillips, and Ecana Corp.’s have barely made a dent. At this point, unless the pace of production sharply declines or demands pick up significantly this summer, it’s probably that the nation’s storage facilities will reach their limits by fall.


If the latter occurs, natural gas prices will have plummeted- dropping from today’s $2.08 per 1,000 cubic feet to a potential low of under $1.

With an excess of production has come the redirection of labor. Since October the number of drilling rigs exploring for natural gas has fallen by 30 percent, according to energy services company Baker Hughes. But workers aren’t being sent home, instead focus has shifted to drilling for oil. And although a productive shift of efforts, drilling for oil only leads to a greater natural gas glut because natural gas is almost always a byproduct of oil drilling.


There is 4.4 trillion cubic feet of natural gas storage capacity in the U.S. If full, the amount would be enough to supply the entire country for about 2 months. If production remains on the same course, storage is expected to fill by October 10. To counter balance this growth, makers of chemicals, plastics, and fertilizers that use natural gas as feedstock are expanding. Garbage trucks, buses, and delivery vehicles are using more natural gas. And, electric power producers are switching from coal to natural gas whenever possible.

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