McClendon: Gas needs to be $7.50 to $9 to maintain supply.
McClendon says $9 gas needed to drill
Natural-gas prices must more than double to $7.50 to $9 per million British thermal units to ensure producers will provide adequate supplies of the power- plant and heating fuel, Chesapeake Energy boss Aubrey McClendon said.
That is the price range needed to maintain the 85% of the US natural-gas supply that comes from conventional wells, McClendon said today at an investor conference in New York sponsored by the Independent Petroleum Association of America.
The Oklahoma City-based company on 16 April said it has curtailed about 400 million cubic feet of daily gas production, or 13% of its capacity, because of low prices, according to a Bloomberg report.
Some producers have also cut back unconventional production such as shales, where costs are lower.
Gas futures traded on the New York Mercantile Exchange have plunged 74% from last year’s high of $13.694 per million Btu as the recession reduces demand for the fuel.
Between 1200 and 1400 operating drilling rigs will be needed to meet US gas demand once the recession ends and industrial consumption returns to normal, McClendon said. There were 760 US gas rigs in service last week, down from a record 1,606 in September, Baker Hughes Inc. reported on 17 April.