Speaker: Exploit natural gas now
Western Colorado should seize what appears to be a momentary chance to export natural gas from the Piceance Basin to international markets, an industry expert said Wednesday.
“I see a window of opportunity of maybe 10 years, but we have to take advantage of that now,” John Harpole, president of Mercator Energy in Littleton, told the Grand Junction Area Chamber of Commerce during an energy briefing.
That window of opportunity is narrow because of the speed with which knowledge of horizontal drilling and hydraulic fracturing of natural gas-bearing formations is spreading around the world, Harpole said.
Two pipelines, the Rockies Express that carries gas from the Rocky Mountains east, and the Ruby that carries gas from Colorado, Utah and Wyoming to the west, have eliminated the price differential that held down the price of gas from fields such as the Piceance Basin in northwest Colorado, Harpole said.
Even so, the abundance of natural gas will continue to hold down its price, he said. Natural gas from the Piceance Basin, however, contains enough liquids to maintain its marketability, he said.
Still, Piceance Basin producers “will have to fight” to sell their product to buyers, Harpole said.
Liquid-laden, or so-called “wet,” gas contains a range of other hydrocarbons, such as ethane propane and butane.
Those products, which are collected from wells as gases, are condensed and separated at the surface, and their price, unlike that of natural gas, or methane, is pegged to that of crude oil.
So, while the price of natural gas, trading at a spot price of $2.48 per thousand British Thermal Units on Wednesday, remains relatively low, liquids fetch prices two to three times that, Harpole said.
That means “wet” gas becomes marketable as the price of crude hits the $65-a-barrel mark, Harpole said.
While natural gas liquids include natural gasoline, their value is as additives to gasoline, pushing 85 octane gasoline to 91, for instance, Harpole said.
Calling the twin advancements of horizontal drilling and hydraulic fracturing the most significant energy development “since we split the atom,” Harpole said the technique is being rapidly adopted around the world.
Development of global resources eventually will catch up to development in the United States, meaning that the nation, and places such as western Colorado, need to press their market advantage while they can, Harpole said. He urged the chamber to join in a trade mission to China this year to open markets for Piceance Basin gas there, as well as in Japan and South Korea.
Such trade missions also have the potential to introduce free-market concepts to centralized economies, such as that of the Peoples Republic of China, and show that “This is how capitalism works,” Harpole said.