Gas prices tied to exploration costs
May 13, 2008 11:48 AM
Itís the high costs of the difficult to reach and developing basins now being tapped to supply this nationís growing demand for natural gas that have driven prices to a new level, and those costs wonít go away regardless of the worldwide price of oil, a ConocoPhillips vice-president recently told Natural Gas Intelligence.
While some believe natural gas prices have been dragged higher by $100 per barrel of oil or pushed up by supply shortfalls, these factors donít explain the step-change gas prices have experienced. Higher full-cycle gas production costs, due particularly to greater reliance on unconventional supply basins, have driven the prices all gas consumers pay to a new level, one where theyíre bound to stay, according to Will Hussey, ConocoPhillips senior vice-president for origination.
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