$5 - $6 for current leases to be profitable $7 - $8 for new leases to be profitable -- Christian Science Monitor
The Christian Science Monitor on March 26 published an article "Do High Natural Gas Prices Mean that the Shale Boom is Ending" with projections on the prices need for profitability.
The collapse in natural gas prices over the last 18 months has caused the natural gas producers to slash their dry gas drilling budgets to focus on liquids.
While liquids drilling does produce some gas, the dry gas drilling budgets are not coming back until there is sustained above $5 mmBTU natural gas.
The annual depletion rates of shale natural gas wells of 30 - 50% will impact production in 2013 and 2014. Without renewed drilling programs combined with high depletion rates for existing wells, prices are going higher.
There is a lot of natural gas available in the US but higher prices are needed to restore industry profitability and justify continued investment.
The investment money for new dry natural gas drilling is disappearing.
In 2013 the reduced drilling budgets and depletion of existing wells will take their toll on production.
It is only a question of time before US natural gas does into production decline. My guess is that we will see declining production during the summer of 2013.
This is a simple economics issue with investment being pulled from an unprofitable commodity until supply and demand come into balance at a breakeven price.
Since there will be a lag before new drilling impacts supply and depletion continues to reduce production, then the pricing pendulum can swing in the other direction to $6+ mmBTU natural gas maybe in 2014.