A new report by the U.S. Energy Information Administration (EIA) notes that natural gas prices in 2019 were the lowest in the last three years.
That won’t come as a surprise to Marcellus shale gas drillers, who spent much of 2019 adjusting to a low-price market. Analysts believe low prices have been a factor in the decision by some natural gas producers to cut back on staff or leave the Pittsburgh region altogether.
Low prices are generally seen as good for consumers but bad for producers, at least over the long term.
One sign of the drop in activity has been the dwindling number of drilling rigs operating in Pennsylvania — from 47 at the beginning of the year to 24 at the end of the year, according to the Baker Hughes rig count.
The Henry Hub natural gas spot price averaged $2.57 per million British thermal units in 2019 — about 60 cents lower than in 2018 and the lowest annual average price since 2016, according to EIA. On Dec. 27, spot prices dropped to $1.75 per million Btu — the lowest since April 15, 2016.
Lower natural gas prices in 2019 supported higher consumption — particularly in the electric generation sector — and higher natural gas exports, EIA said. Continued growth in domestic production of natural gas also supported lower natural gas prices throughout the year.
low commodity prices for natural gas is our most understated energy reality that will continue to lock-in more usage. On December 26, Henry Hub gas hit its lowest price since April 15, 2016.
— JudeClemente (@JudeClemente) January 6, 2020
The mild winter so far also has put downward pressure on natural gas prices, insofar as warmer temperatures have created less demand for home heating.
