ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, has released its ICForecast Strategic Natural Gas Outlook for the second quarter of 2014. The study highlights the near- and long-term future of natural gas prices and market economics including a national and regional look at supply and demand dynamics.
“As a result, ICF has increased its production projections for both the Marcellus Shale and the Utica Shale to a combined total of 25 billion cubic feet per day by 2020.”
The ICForecast Strategic Natural Gas Outlook for the second quarter of 2014 highlights a significant increase in production in the Northeast U.S. from the Marcellus Shale and the Utica Shale. For Marcellus, natural gas production growth continues unabated, driven by producers’ continued improvements in drilling and fracturing technologies and techniques. High production continues to be a dominant theme despite decreased rig counts – another indication that innovative uses of technology are contributing to favourable production economics.
“Despite a slight downturn in the Marcellus rig count over the past year, output has grown as producers reduce drilling time and increase the production per well. The Utica, which was originally expected to have higher oil production, has had significant growth in gas production,” said Frank Brock, senior energy market specialist for ICF International. “As a result, ICF has increased its production projections for both the Marcellus Shale and the Utica Shale to a combined total of 25 billion cubic feet per day by 2020.”
Even with strong production gains, natural gas prices are currently being supported by increased storage demand stemming from the recent long and cold winter. ICF projects gas prices to firm through the end of 2014 – albeit somewhat lower than the current New York Mercantile Exchange futures strip. For 2015, the company forecasts the potential for gas prices to trend lower, as production continues to grow and demand stays a step behind. However, ICF projects gas prices firming from 2016 through 2020 as increased demand from new liquefied natural gas export projects, increased exports from Mexico and new industrial demand tighten the supply/demand balance. Additionally, the recent court decision upholding U.S. Environmental Protection Agency regulations will continue to reinforce the trend away from coal-fired generation and facilitate new natural gas-fired power generation development.
“The uncertainty over the timing of new demand sources and the midstream infrastructure needed to bring new supplies to market create the potential for increased price volatility through the end of the decade,” said Brock.
The ICForecast Strategic Natural Gas Outlook is a quarterly report that provides a comprehensive projection of gas supply, demand, pipeline flows, price and basis for the U.S. and Canada as well as for regional markets for 25 years forward. The study is produced by ICF’s natural gas market experts based on results from the Gas Market Model (GMM®) – ICF’s proprietary model of the North American gas market. The report can be used, for example, to examine the impact of pipeline expansions due online in the fall of 2014 on prices at key natural gas trading points throughout the U.S. and Canada.
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