Shale Gas Ripe For Resurgence On Strengthening Henry Hub
BMI View: Our Henry Hub price forecast suggests that production will increase particularly in the Barnett and Cana Woodford shale plays over the remainder of 2014. This will be underpinned by stronger gas prices that improve the economics of production. With the top acreage position in both plays, Devon Energy is at the forefront to benefit from this development.
The Henry Hub gas price is regaining strength following the low price environment of the last four years caused by a glut of shale gas. Reduced production from some of the drier shale gas formations combined with the unusually cold 2013/2014 winter, now appear to have balanced the oversupply that has held prices down. Our Henry Hub price forecast sees an average of USD4.5 per million British thermal units (/mnBTU) for 2014, up USD1.50 from 2011, and we forecast this to rise to USD5/mnBTU in 2015 and over USD7/mnBTU by 2020.
While higher Henry Hub prices will improve the economics of developing shale plays, the unique geological characteristics and different hydrocarbon content of each play/basin means this will not happen uniformly across the US.
|Henry Hub Gas Price Forecast|
|BMI Henry Hub Price Forecast (US$/mn BTU)|