Natural Gas Prices Nearing All Time High
$2.5 million worth of natural gas is produced in Sublette County each day
by Rob Shaul

Natural gas prices have reached an all time high according to the June 28 issue of the Wall Street Journal. The WSJ report said natural gas prices reached an all time high on June 27 at $4.686 per million British Thermal Units. This price more than doubled last year's price for this time of year.

The WSJ report blamed this summer's heat for the high prices. Many utility companies, which use natural gas to power electric turbines, reported a surge in demand as people in the heat wave areas cranked up their air conditioners.

Further, the report said to expect prices to continue to rise this winter, as people switch from air conditioners to their heating furnaces.

"At the heart of the increase," reads the report, "has been the simple inability of producers to build up the country's gas reserves amid soaring usage. According to the American Gas Association industry group, gas reserves have been growing by an average of 42 billion cubic feet each week since the prime delivery season started in April, down 24% from the year-ago average of 55 billion cubic feet.

The most accurate gas price for natural gas produced in Sublette County is the spot price at the Opal hub. Tuesday's Opal spot price for 1,000 cubic feet (MCF) was $3.60. The average spot sale price for one MCF of natural gas for July of last year was $2.00. This is a price increase of 80%.

Approximately 690,000,000 cubic feet of natural gas is produced in Sublette County each day and flows to Opal through Williams Field Service's lines in the western part of the county, or Jonah Gas Gathering's lines in the southern part of the county. Based on Tuesday's Opal spot sale price of $3.60, this means that approximately $2.484 million worth of natural gas is produced in Sublette County daily.

In 1999, Exxon was the largest natural gas producer in the county with 70.4 million MFC, according to figures from the Sublette County Assessor. McMurry Oil was the second largest county producer with 57.1 million MFC. Enron (34.9 million MCF), Mobil (30.7 million MCF) and Amoco (19.1 million MCF) round out the top five producers in Sublette County. Altogether, 245.6 million MCF of natural gas was produced in Sublette County in 1997.

Today's high natural gas price isn't going unnoticed by the local producers. Enron Oil and Gas' Curt Parsons says he has every well flowing at capacity, and the high prices are making Enron a "little more aggressive" when it comes to drilling this year. Enron will do a little more exploratory drilling this year than normal, says Mr. Parsons. His company expects to drill approximately 50 new wells this year in the Big Piney area, although a number of those will be oil wells, he says.

High natural gas prices also means more money for county government. This year's countywide assessment of $475,836,000 is the highest ever, and is driven by natural gas production and prices. To put this in perspective, of the $2.484 million worth of natural gas that is being produced in Sublette County daily, approximately $29,808 per day is flowing to the county government.

The Wall Street Journal said the demand for natural gas won't go down any time soon. According to the report, approximately 15% of the country's electricity is produced using natural gas and most of the new power plants are installing natural gas turbines because natural gas is the cheapest fossil fuel, and natural gas turbines are the easiest to get permitted.