EQT CEO Warns Lack of Gas Storage Will Trigger Price Gyrations

(Bloomberg) -- The chief of the largest US producer of natural gas has warned that a lack of pipelines and storage facilities will trigger dramatic price swings in the years ahead, causing them to surge as much 350%.

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Gas demand in the US has jumped 50% since 2010, while pipeline and storage capacity have increased just 25% and 10% respectively, EQT Corp. Chief Executive Officer Toby Rice said during an interview at the CERAWeek by S&P Global energy conference in Houston. That leaves the market prone to wild price swings, ranging from today’s level of about $1.75 per million British thermal units to as high as $8, Rice said.

“This is the world we live in unless we get serious about getting more infrastructure built,” said Rice, whose company last week agreed to buy Mountain Valley Pipeline developer Equitrans Midstream Corp.

Rice is a long-standing and vocal critic of the US regulatory framework and permitting process that he says holds up the construction of new pipeline infrastructure. In November, he warned that a pipeline crunch threatened to trigger an energy crisis. Rice also said in December that falling prices will lead to a slowdown in drilling, and that prices were well below the break even cost of production.

Read More: EQT to Acquire Mountain Valley Pipeline Owner for $5.5 Billion

US gas prices have undergone a dramatic collapse this year, plummeting to the lowest in four years and prompting several producers including EQT to slash production.

Read More: Gas Prices Jump as Top US Driller Slashes Output to Fight Glut

Another factor threatening to send prices swinging in the other direction is the dozens of coal plants that have closed in the US in recent years. Coal plants have traditionally helped keep gas prices in check because when it gets too expensive, electricity generators turn to coal for more of their power.

“That’s no longer an effective lid on prices,” Rice said. “So you can see prices run through that and unfortunately start seeing industrial demand destruction driving price. That’s sort of the dynamic you saw in 2022 and would leave you with prices close to $8.”