MORGANTOWN, W.Va. — The price of oil has shot up and bounced around in near-record territory since the start of conflict in the Middle East, while natural gas prices have hit a seven-month low.
Diversified Energy CEO Rusty Hutson said the January price of about $7 per MMBtu dropped into the $3 range in February, and in April the number has fallen into the $2 range.
Falling prices have been blamed on a warmer than normal spring, something Hutson doesn’t understand with all of the new demand coming online. Also, about one month ago, Qatar reported extensive damage at the world’s largest natural gas export plant. The attacks blamed on Iran damaged 17 percent of their export capacity, and it will take three to five years to repair. The facility accounts for about 20 percent of global liquefied natural gas supply, so that void will have to be filled.
“The United States is the only really viable and capable LNG exporter that can do that and that’s why it’s a little baffling to me why natural gas prices continue to to linger the way they are,” Hutson said during an appearance on WAJR’s “Talk of the Town.”
But he said work has to start now on permitting reform. The United States could be an even larger player in the LNG market if there were an adequate network of pipelines.
“I know that’s being worked on at the national level in Congress in terms of permitting reforms that will hopefully get done that will help us to be able to build pipelines quicker and with less resistance from environmental groups,” Hutson said.
Major cities like Boston have purchased natural gas from Russia in the past and now Middle Eastern countries, while some of the world’s largest supplies are within a few hundred miles. New York state could benefit from a low-cost supply of natural gas with their concentrated population centers and cold weather, but Hutson said policies in the state would never allow it.
“New York has been the biggest barrier to stopping all pipelines and anything to do with fossil fuels,” Hutson said. “We have a lot of additional demand here in the United States if we can just get some pipelines built.”
Expanding the pipeline network would increase production and the need for storage capacity that hasn’t been increased for decades, again due to onerous regulations. The ability to construct and use pipelines would have a huge positive impact on local and state economies but finding a company to accept the current risk is unlikely.
“All these things would have a huge impact on the West Virginia economy, but nobody is willing to commit that capital knowing these things get tied up for years like the Mountain Valley Pipeline did,” Hutson said.
U.S. Senator Shelley Moore Capito has been a champion for permitting reform, and Hutson believes there are opportunities to negotiate with the anti-fossil fuel crowd. Supporters of renewable energy options need very similar transmission assets to move electricity, and that could be the issue to move permitting reform forward.
“They need this permitting reform to get any kind of infrastructure built for their renewables and the power grid,” Hutson said. “Now, we have some common ground between the two parties to work with, and we’re very hopeful that with U.S. Senator Shelley Moore Capito’s leadership, this will get done.”