Shell’s chief executive told The Financial Times the company expects natural gas prices in the U.S., which are near 10-year lows, to double by 2015.
In an interview, chief executive Peter Voser said Shell is using a price of $4 to $6 per million Btu for 2014-2015, up from the current $2.55.
The price increase will be driven by increased demand, “as coal is replaced by gas in electricity generation, and natural gas in transportation takes off.”
Shell is also looking into turning U.S. natural gas into diesel. The Wall Street Journal recently reported that Shell is considering building a plant in Louisiana similar to an existing gas-to-liquids facility in Qatar.
At $6 is NG still a bargain for transportation fuels? In a word, no. About the time the NG market hits $8 and above, there will be a significant amount of remorse from all those fleet managers for ever considering CNG conversions. CNG requires high maintenance compressors, a multi-$Trillion distribution system, serious environmental impact for extraction (fracking) and is not only the most volatile (unstable and explosive) transportation fuel, but also has the most volatile price history of any energy source over the past 10 years. CNG is a fossil fuel with a finite volume available. It has little future for achieving large scale production status for transportation. [2010 – $75 petroleum barrel equiv.; 2008 – $340 barrel equiv.; 2006 – $225 barrel equiv.]