Natural gas prices have not started out well in 2013 for Oklahoma energy producers.
The price slipped 16 cents, or nearly 5 percent, over the first two trading sessions of the year to close at $3.19 per thousand cubic feet Thursday.
The drop continues a six-week slide that is instilling concern in some Oklahoma producers, royalty owners and related companies that had been hopeful when the natural gas price climbed for seven months earlier in the year.
Lower natural gas prices are good for consumers and for industries such as manufacturing and chemicals production. But in a state where more than 340,000 jobs are directly or indirectly fueled by the oil and natural gas industry, the price slide can be worrisome.
The most recent downturn has been sparked by reports that the country's natural gas storage inventories recently hit a record high of more than 3.9 trillion cubic feet and by forecasts of moderate temperatures for at least the next two weeks.
But not everyone is worried.
Tony Say, president of Oklahoma City-based Clearwater Enterprises Inc., said the price slip is an overreaction.
“Behind this moderating weather, there is supposed to be some pretty cold weather in the next 10 to 15 days,” he said. “Hopefully that will move things back up a bit.”
Say said he expects prices to stay within a range of $3 to $3.50 throughout the winter and that the price could climb higher in the spring as production continues to drop.
Relatively low prices over the past two years have led many of Oklahoma's energy producers to switch as quickly as possible from a focus on natural gas to an emphasis on oil. But natural gas continues to make up a significant amount of their production.
SandRidge Energy Inc. has boasted of its early forecasts and relatively quick switch, but natural gas still represents 47 percent of its production.
Chesapeake Energy Corp., previously known as “America's Champion of Natural Gas,” has said it plans to boost its oil and natural gas liquids to 35 percent of its production by 2015. As of August, however, natural gas and natural gas liquids still represented 87 percent of its mix.
Devon Energy Corp. historically has chosen a more balanced approach. Even still, the company produces 63 percent natural gas.
Continental Resources Inc. has the heaviest oil position among Oklahoma City's larger energy firms, but even “America's Oil Champion” has a 30 percent exposure to the low-price gas.
Many of the state's smaller companies are less able to change course and are even more dependent on natural gas.
While oil rich plays throughout the state have gained in popularity, Oklahoma continues to rely heavily on the price of natural gas.