“I Guess This Is the ‘High Price’ Case”
Forecasts using $2.50 gas underestimated 4 factors
- Average E&P companies cannot return cost of capital
- F&D costs deceptively low due to minimal exploration
- Supply has not kept pace with demand for a long time
- Burned through US gas bubble, then through Canadian excess
- Economic factors intensifying growth in gas demand
- Shift in economic activity toward power-hungry activities
- Environmental vetting leaves gas the only real option
Result: $2.50 long-term gas price unrealistic
Most forecasts of long-term gas have been based on unsustainable gas prices.