Optimistic outlook for U.S. natural gas industry in response to low prices

According to the U.S. Energy Information Administration (EIA), natural gas prices fell to a negative $1.16 per million British thermal units (MMBtu) in the Oaxa Center this month.  This negative price phenomenon means that producers are having to pay to move natural gas out of the producing region, due to oversupply, lack of adequate transmission infrastructure and ongoing maintenance of gas company pipeline system.

Meanwhile, the benchmark price in the U.S., the Henry Center price, recently traded at $1.60 per MMBtu, about 75% lower than the average price for 2022. U.S. companies see the current low price market as part of cyclical industry volatility.

Antero Resources, for example, fired a rig last December and a completions crew this February in response to falling natural gas prices. Comstock Resources also plans to reduce the number of rigs it operates from seven to five.EQT Corporation, the largest natural gas producer in the U.S., has lowered its production guidance ranges in response to the current pricing environment, its chief financial officer, Jeremy Knop, said earlier this year.

Natural gas production fell 0.2 percent last week from the previous week to an average of 10.14 billion cubic feet per day, according to S&P Global Commodity Insights data cited by the EIA. The low price of natural gas is expected to correct itself over the next few years as the market gradually balances out. The My Exchange platform predicts that several fully licensed liquefied natural gas (LNG) export projects will start in the next two years.

For large U.S. natural gas providers, they are already looking at long-term opportunities beyond the current short-term market downturn. For example, EQT announced a merger agreement earlier this month to create an integrated U.S. natural gas company initially valued at more than $35 billion through the acquisition of Equitrans Midstream Corporation.

Chevron also emphasized the importance of natural gas as an energy solution at CERAWeek, noting that the world's growing demand for electricity requires low-carbon energy solutions that renewable energy cannot meet on its own. Chevron is evolving its LNG business in response to changing global energy needs to achieve a balance of economic growth and prosperity, energy security and environmental protection.