Near Term Natural Gas Producer Aims To Fuel Energy Transition

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Some serious developments are happening in the natural gas industry.

A quick glance at the Trading Economics chart for the price of natural gas depicts a clear upward trajectory since June 2020. Following a bottom price of approximately $1.45 per million British thermal units (USD/MMBtu) in June 2020, the price of natural gas increased to approximately 3.37 USD/MMBtu in October 2020, representing a 232% increase.

In October, one year after the previous price “top,” the price of natural gas had risen more than fourfold from June's bottom, reaching a height of 6.31 USD/MMBtu. Following a short relief period, natural gas is now continuing its steady rise. It currently flirts with the 5 USD/MMBtu price level, after having breached it about a month ago.

Russia’s invasion of Ukraine now threatens to accelerate natural gas’s already-steady hold on global demand. The prices of crude oil, palladium, platinum and wheat – commodities with a strong Russian origin –  have already skyrocketed, and some analysts believe natural gas is heading toward a similar trajectory.

Russia is the world’s second-largest producer of natural gas, producing 22,728,734 million cubic feet of the commodity per year. With the world applying stringent economic sanctions on the country, a sanction on Russian natural gas could mean stratospheric movements in natural gas prices. 

NG Energy International Corp. GASX GASXF, for example, is a junior oil and gas explorer rapidly approaching first production of natural gas from one of several assets in Colombia. In the coming weeks, the company will complete construction of a pipeline connecting their northern gas field to national infrastructure. This is a huge step for NGE who aim to add to reserves with near term drilling and bring much needed natural gas online in the country. Colombia is facing a natural gas supply deficit; legacy reserves are declining at roughly 7% per year during a time where domestic demand is growing at roughly 4% per year. This natural gas shortage is driving a significant price premium on domestic gas when compared to North American pricing. Colombia is a very strong macro environment for producing, and in NG Energy’s case, soon to be producing companies.  

NG Announces Drilling Update On Its Highest-Potential Asset

In addition to near term production from their first asset, NG Energy has made significant progress with its flagship property: Sinu-9. This asset covers an area of 311,353 acres and accompanies two basins with the largest gas and light oil potential in the country. The area has excellent infrastructure with open access to national oil and gas pipelines and coverage of a reliable electricity grid.

Last fall, NG reported that its petition for drilling 22 wells and the associated work programs for the construction of associated surface infrastructure, including roads and pads, for the Sinu-9 project, had been approved.

As of Feb. 23, NG and its contractors began mobilizing the drilling rig and related equipment to the location where the Magico-1 well, one targeting the Sinu-9 asset, will be drilled and tested. The road to the platform is complete, and construction on the pad is in progress with drilling expected to commence in the coming weeks.

On the neighboring property, Canacol Energy recently drilled Aguas Vivas 1 and hit 402 ft of pay zone and tested 35.5 MMcf/d directly East of Sinu 9. This significant discovery by Canacol, along with strong seismic and geophysical indication of gas presence at Sinu-9, has increased the company’s confidence level for success in their near term drilling campaign.

The company has a third asset, Tiburon, which holds various similarities to the massive offshore Perla and Orca discoveries in Venezuela and Colombia. The team intends to shoot a seismic survey and then evaluate next steps. Due to the high scale nature of the territory, management will most likely consider a farm-in partner to help develop the block

Amidst a global energy crisis, it is exciting times for NG Energy who are on the doorstep of achieving significant milestones and making progress on their mission to fuel Colombia’s energy transition.

Other Oil And Gas Companies: 

Williams Cos. Inc. WMB is an American energy company focused on gas extraction, processing and transport. The company owns more than 13,000 miles of gas pipelines in many shale regions, including North Dakota, Texas and Pennsylvania. On average, Williams Cos. Inc. produces 1.2 billion cubic feet of natural gas per day.

PetroChina Co. Ltd. PTR is a Chinese oil and gas company with headquarters in Beijing's Dongcheng district. The company is the largest manufacturer of oil and gas in the Asian region.

YPF SA YPF is an Argentine energy company engaged in the exploration, production and transportation of oil and natural gas. In addition to natural gas, the company offers diesel, lubricants, asphalts and many other crude oil products.

Click here to follow up on NG Energy’s drilling and execution plans. 

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.

Photo Provided by NG Energy