Like a bat out of hell part three: Gas more resilient than oil

The third in a five-part series from the BRG energy and climate practice evaluates the impact of plunging oil prices on natural gas and LNG

The oil market crash will have critical knock-on effects on the production and price of shale gas in the US. Lower oil prices will remove a crucial production cost credit for associated gas output in major centres such as the Permian basin and the Bakken shale play. Lower oil prices will also keep down prices for liquefied petroleum gas (LPG) and competing natural gas liquids (NGLs), both of which are highly correlated to oil prices. This will reduce the production cost credit for NGL-rich gas output from prolific shale plays such as the Marcellus and Eagle Ford. Our analysis and forecasts indicate that most producers will maintain output from existing wells, leading to sustained high gas pr