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Royal Dutch Shell said it expects US natural gas prices, which have been pushed to 10-year lows by the shale gas boom, to double by 2015 on the back of growing US domestic demand for the fuel.
In an interview, Shell chief executive Peter Voser said that internally the company was using a price of $4 – $6 per million British thermal units for 2014-15, up from the current $2.55.
America’s energy landscape has been transformed by the shale gas revolution, as reserves once considered uncommercial have been unlocked by techniques such as horizontal drilling and hydraulic fracturing, or “fracking”.
The surge in gas production has depressed the price of Henry Hub, the US benchmark gas price, putting investors under pressure.
But Mr Voser said he did not see the price of US gas staying this low for long. “As coal is replaced by gas in electricity generation, and gas in transportation takes off,” demand will grow and prices will inevitably rise, he said.
Shell itself is looking at new ways to reduce its exposure to Henry Hub by putting its North American shale gas reserves to more profitable use. It is planning to build a liquefied natural gas plant in Kitimat, British Columbia, which will export LNG to Asia. It also has plans for a gas-to-liquids facility which will convert the gas to clean-burning transport fuel. Shell also wants to use its gas as a petrochemical feedstock.