Chesapeake CEO expects long-term $5 natural gas

Chesapeake Energy (NYSE:CHK) CEO Aubrey McClendon, the man at the center of the U.S. domestic natural gas boom, said April 2 that he does not expect the price of natural gas to rise above $5/mmBtu for years to come.

McClendon made his comments during a lunch address to the Platts Global Power Markets Conference in Las Vegas.

While one of the warmest winters in decades has kept natural prices around $2/mmBtu this year, the Chesapeake CEO predicted gas will stay below $5 “indefinitely.” He also predicted upwards of 75 GW of new natural gas-fired electric generation will be built in the coming years as domestic gas from shale claims market share from coal.

Calpine (NYSE:CPN) CEO Jack Fusco, whose company has a major fleet of combined-cycle gas power plants, earlier touted gas as a simple solution for both inexpensive power and reduced emissions when compared to coal. McClendon said he couldn’t make the case for gas much better than Fusco.

Natural gas “should be viewed as baseload fuel for decades to come,” McClendon said. The current move toward expanded use of gas for power generation should not be compared with the last so-called “dash-to-gas” a decade ago. That gas power boom was not based on technology. Nobody asked the producers if they could provide sufficient supplies of gas back then, McClendon said.

Some of the world’s largest reserves of natural gas have been discovered in the United States in the past decade thanks to horizontal drilling and hydraulic fracturing (fracking) that Chesapeake and other producers have been in the forefront of deploying, McClendon said.

Also, for all the talk of how volatile gas prices can be, they have been very stable for three years now, the CEO said. That is thanks to what used to be called ‘unconventional’ supplies of natural gas, like shale gas, McClendon said.

The Chesapeake CEO said his company is working to make fracking more benign, although he said most fracking criticism is without merit. McClendon also said that some exports on natural gas should be allowed as a buffer to help producers make it through the occasional depressed domestic market.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.