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Cold weather pushes gas prices to 4-year high
January 27, 2014 - Ben Klein
OKLAHOMA CITY (AP) — Oklahoma natural gas producers say demand for the fuel should remain strong as frigid temperatures grip much of the nation.
While some companies have moved away from dry natural gas wells, Oklahoma producers say the fuel still represents a large percentage of their haul.
"February should be over $5 for Oklahoma gas, which is something we haven't seen in a long time," Tony Say, president of Oklahoma City-based Clearwater Enterprises, told The Oklahoman (http://bit.ly/1dXUrLE ). "It's going to help their cash flow and that of the state. It's very positive for Oklahoma producers."
Unusually high demand has pushed natural gas prices to a four-year high. The futures price for natural gas jumped 45 cents, or 10 percent, on Friday to close at $5.18 per thousand cubic feet.
"We've seen a fundamental shift in gas pricing," Say said. "There's plenty of gas out there, but with these next few weeks of cold weather, we could be depleting storage numbers to dangerously low levels come April 1."
That date is considered the end of the winter natural gas withdrawal season and the beginning of the injection season when storage is refilled.
"There's going to be a big push to put gas back into storage this summer," Say said. "If it's a hot summer, perhaps there could be significant summer usage and we could go into the following winter with very low numbers in storage."
The country's natural gas storage supplies fell to 20 percent below year ago levels even before the current cold snap.
"We've got record demand, record withdrawals from storage, and short-term production is threatened," energy analyst Stephen Schork said. "It's a dangerous market right now."
Natural gas is used by half the nation's households for heating, making it the most important heating fuel. Electricity is the second most popular heating source, and electric power generators use natural gas to generate power more than any other fuel except coal.
The Marcellus Shale in the Pennsylvania area is one of the few areas in the country where producers are drilling wells exclusively to search for natural gas. Elsewhere, producers are searching for oil although most wells still produce large amounts of natural gas.
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