Future of natural gas is now: ND averages lowest natural gas prices for last 3 years
Turning on the lights shouldn't cause money issues for North Dakotans. The state has averaged the lowest cost for natural gas in the nation over the last three years, passing the savings onto consumers, the North Dakota Public Service Commission announced Thursday.
North Dakota priced out at $8.05 per million cubic feet last year, 2 cents more than Colorado, according to a press release. The Peace Garden State sold natural gas for $8.46 in 2009 and $8.08 in 2010.
"This is a good example of how North Dakota is benefiting directly from the energy development in the state," Public Service Commissioner Brian Kalk said Friday. "I think that is a big reason why the natural gas prices are so low because there is just so much coming out of the ground."
The national average was $10.80 per MCF. Hawaii came in at $55.
Approximately 66 billion cubic feet was consumed by residential, commercial and industrial areas in 2010, according to the U.S. Energy Information Administration. Natural gas can be used for heating and electricity. North Dakota hit an all-time high for producing gas in March at 620,848 MCF per day.
North Dakota exports the vast majority of its natural gas, said Lynn Helms, North Dakota Department of Mineral Resources director, adding it has an oversupply.
"It's a big positive for our consumers and local industry that might be a natural gas consumer," he said. "Because we see our gas production growing for a long time, we should maintain that position of having, on a relative position, low natural gas prices compared to the rest of the country."
While the state has a good system to distribute the gas within the state, it could run into restraints exporting gas as it increases production, Helms said.
Capturing natural gas has also been a concern for the industry, said Jack Ekstrom, Whiting Petroleum Corp. vice president of corporate and government relations in Denver. It is difficult to determine if there is a market for gas when companies first start drilling in a major play.
He confirmed there is a market for gas in North Dakota, and as infrastructure grows, less gas will be flared and more will be utilized for energy use.
"The future is now," he said. "We're gathering it and processing it ourselves, and it's going to continue to grow."
Whiting has a natural gas processing plant south of Belfield.
Kalk said capturing natural gas will aid the state economically environmentally.
"For many, many years we were flaring off natural gas in North Dakota because it wasn't economical to recover," the commissioner said. "It keeps the cost down, and cost of energy is a big thing."
Helms said the state is gradually reducing the percentage of gas being flared, which is about 40 percent. He believes construction for pipelines in the state will drop flaring to about 20 percent by the end of the year.
Unless there is a major change in regulation, citizens and industries should continue to see low prices for "quite some time," Kalk said. It also creates awareness of other resources besides oil, coal and wind, he added.
"Natural gas has been the untapped resource," he said. "People are aware it is low cost. It is available. They can make the best decision for them."