“As far as I can see…none will materialize….”
A global natural-gas cartel has yet to materialize, “and as far as I can see—the next five years—none will materialize for various reasons,” says Tom Petrie, vice chairman, Bank of America Merrill Lynch. OPEC controls a great deal of global oil supply—adding or curtailing crude oil onto the market as demand-driven prices wax and wane.
Several years ago, discussion reignited around a “natural gas cartel,” with Qatar and other prodigious gas producers at the top of the conversation. Qatar has practically zero production costs, plus proven reliability and hefty supply.
“The (gas) demand growth is really the issue,” says Petrie, speaking to attendees at the ninth annual A&D Strategies and Opportunities conference, hosted by Oil and Gas Investor and A&D Watch.
U.S. producers have proven they can make more natural gas from the U.S subsurface and for a hundred years, at least, working the unconventional resources that range from the original shale play—the Barnett—to the Marcellus, Eagle Ford, Haynesville, Woodford and Canadian shale’s too.
An advocate of greater dependence on indigenous U.S. natural gas and reduced dependence on crude oil for transportation is wildcatter Boone Pickens. Boone “is on the germ of a good idea...I think the problem (in Washington) is it's Boone's idea and not Washington's,” Petrie says.
If there is a successful effort to increase the use of natural gas—and decrease the use of crude oil—for transportation fuel, “one could see over two decades a period a powerful impact,” Petrie says.
Meanwhile, in the U.S., coal will continue to compete with natural gas as a source of electric-power generation. “It is easier to be bullish, longer term, on crude than any other energy commodity…(Its) role as a transport fuel is not threatened in any meaningful way for decades.”
And, for those in pursuit of unconventional gas resources in North America, “one has to believe (gas) prices have to be higher.”
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