Icy blasts spike natural gas price
A nearly 10 percent spike in the price of natural gas on Thursday was likely driven by the icy blasts on the country’s east side, but industry officials said it has yet to generate confidence that the price level can last.
The price of natural gas rose to $6.15 per thousand cubic feet, up $1.33 from a week before and $2.88 from a year before, according to the Energy Information Administration.
“Short-term weather phenomenon,” said John Harpole, president of Mercator Energy LLC in Littleton.
Though the price bump is a welcome development for companies that sell natural gas on the spot market — where gas for which there are no contractual obligations is sold — “the market fundamentals that have established a long-term pricing of $4 to $5 haven’t changed,” said David Ludlam, executive director of the West Slope Colorado Oil and Gas Association.
“Short-term price signals are not enough to spur new drilling programs. Operators here are looking for sustained higher prices and that’s why LNG exports and new markets are important for the long-term promise of the Piceance Basin,” Ludlam said.
Even without the price spike, WPX Energy has expanded its fleet of rigs to nine this year, two more than last year.
Other operators, such as Ursa Operating Co Ltd., will use the revenue from higher-than-expected short-term prices to bulk up their bottom lines and possibly fund other ventures, officials have said.
Ursa is operating one drill rig and is considering adding a second in 2015.