EQT Corp., the largest natural gas producer in North America, scaled back output earlier this year in response to low prices amid a mild winter. However, with forecasts for sizzling summer heat domestically and abroad, CEO Toby Rice said the Pittsburgh-based company has started to bring back the 1 Bcf/d curtailed in late February.
“We are in the process now,” Rice told NGI Tuesday after presenting at the LDC Gas Forums Northeast in Boston. He described it as an incremental undertaking without a specific timeline. He said EQT could unfurl the retrenchment gradually, with the pace determined in part on prices.
Depressed gas prices below $2/MMBtu in February galvanized producers to pull back after U.S. output touched all-time highs around 107 Bcf/d early this year. The lofty production intersected with benign weather and soft heating demand. EQT’s decision followed Chesapeake Energy Corp.’s 15% reduction announcement in February.
Some smaller producers followed suit. Lower 48 production slowed to as low as 95 Bcf/d at points in the spring, though part of that was because of maintenance events, according to Wood Mackenzie. The firm estimated on Tuesday that production averaged 99.7 Bcf/d over the prior seven days.
The reductions had their intended effect. Front-month Henry Hub futures jumped nearly 30% in May. The July contract has rallied this month. It leaped over the $3.00 level on Tuesday and settled at $3.129, ahead 22.3 cents on the day and up about 20% from just a week earlier.
At the same time, NGI’s Spot Gas National Avg. gained more than 10% last month. It averaged $1.920 on Tuesday, up more than 50% from the start of June trading.
Rice said the EQT production cut was never intended as anything more than temporary, given expectations for mounting demand both domestically and internationally. Summer demand is expected to swell amid forecasts for above average heat across North America, Europe and Asia. A Gulf Coast LNG boom is projected to follow with several new facilities nearing completion and poised to roughly double calls for liquefied natural gas by the end of the decade.
Rice said EQT is “all in” on natural gas for decades to come, viewing it as the most efficient way to reduce carbon dioxide (CO2) emissions globally while meeting the world’s increasing needs for affordable, reliable energy. He said that over the past 15 years of the natural gas boom in the Lower 48, U.S. emissions were cut dramatically as gas consumption displaced coal. This process reduces CO2 released into the atmosphere by about 40%.
This could play out across the globe in coming decades – as it has to a degree already in Europe and Asia in part because of LNG, according to Rice. He said natural gas is the only realistic way to address climate concerns while still meeting energy demands with reliable and affordable fuel. Renewables such as wind and solar are important pieces of the overall pie, but they are intermittent sources. If backed up by massive battery power to make them reliable, renewable energy costs could balloon, speakers at the conference said.
Rice told NGI that Americans expect low-cost energy, and other parts of the world simply cannot afford ultra-expensive fuels. He said a truly global build-out of natural gas could necessitate U.S. production swelling to 300 Bcf/d. However, the Lower 48 could ramp up production 10% a year and still be drilling for gas 40 years from now.
Rice said a cumbersome U.S. permitting process remains the principal roadblock before U.S. producers and a major expansion. Environmental concerns have weighed heavily on policymakers, including the Biden administration, but Rice said he and others in the natural gas industry have begun to make headway in Washington, DC, over the past two years.
Realistic Solutions
The energy supply disruption caused by Russia’s invasion of Ukraine in 2022 and now the emerging prominence of artificial intelligence and rapidly growing energy demand from data centers to power the technology have demonstrated the need for natural gas to endure in the global energy mix, Rice said.
He thinks this could pave the way for permitting reform and, in coming years, new pipelines and storage facilities. He also noted that NET Power Inc., a company helmed by his brother Daniel, also is developing the framework for a network of power plants that both consume gas and then capture and sequester it. This could pave a path toward zero-emission use of natural gas.
“Now, a worse-case scenario for Americans is one where we don’t get more infrastructure, we let politics get in the way of market-driven progress. What happens then? Energy prices get really high, and that is not sustainable for America,” Rice said.
Rice envisions a future in which U.S. companies can efficiently produce and deliver natural gas across the nation and globally. In today’s dollars, that could put Henry Hub prices around $4.00 on average. That’s more than double the lows of 2024, but it would set a level at which consumers would pay prices roughly in line with what they are used to over the past decade.
Speaking to an audience at the forum in Boston, Rice said, “We should be talking about massive, world-changing initiatives…We have the assets. We have the technology and the bright minds.”
Daniel Rice, also speaking at the event, amplified his brother’s view. “There’s no energy future without natural gas,” he said. However, with a grid system “that’s already fragile,” there are “major, major reliability issues coming down the pike” without more natural gas pipelines and storage. The good news, he added, is that the “challenges are regulatory in nature. They are not scientific.”
