An admitted market bear says the industry’s current prospects make him “a little more upbeat than I normally am.” Porter Bennett, president and chief executive for Ponderosa Advisors, told attendees at Hart Energy’s DUG Midcontinent conference, in Tulsa, Oklahoma, that “I have bearish tendencies” but he sees a future bright for producers and the midstream.

“We’re producing more natural gas, more natural gas liquids, and soon more crude oil, than the country can consume,” Bennett told the Tulsa event, which attracted more than 1,000 attendees.

Abundant supply and slack demand— thanks to a soft economy and industries not geared to use those hydrocarbons—creates low prices for now. But those attractive prices will create new demand, and higher prices, in the long run.

“Customers are finding new ways to exploit that low-cost energy,” he said. Current trends also “probably will lead to the export of crude, propane and even ethane,” along with liquefied natural gas.

What has happened is “historic and tumultuous. It’s hard to understate the issues when you think about the changes in the past 10 years,” Bennett added.

The industry analyst broke down economic trends by commodity. For gas, he cited current production of 64.4 billion cubic feet (Bcf) per day. “That’s the positive side,” he added and up sharply from a few years ago.

However, Bennett noted the current mark actually is down 200 million cubic feet (MMcf) per day from fourth-quarter 2012. “We’re in a market where production may have stabilized” and that’s a good thing for the industry, he said. A more-normal winter has helped reduce a gas-storage glut, he noted.

For crude oil, Bennett said output also has increased dramatically, rising 1.8-million-barrels-( bbl.)-per-day since 2011—truly “an unexpected event,” he said. “All of that new crude is trying to find its way to refineries and storage facilities,” creating challenges for the midstream. Trends indicate crude production could rise another 5 million bbl. per day by 2025, “that assumes the rig count and initial production, well performance and the regional distribution of production remains constant. The most important variable is the price of crude—if it stays between $70 and $100 (per bbl.),” he added

A significant challenge will be how, and if, U.S. refineries can process that increase. The bulk of new domestic production is light sweet oil from shale plays, flooding into an industry that has skewed toward heavy, sour feedstocks over the years.

Rising production has created an equal challenge for natural gas liquids (NGLs), he said. “In 2009, NGLs were a value-add to gas but they became the primary target as gas prices began to fall,” Bennett added. “Unlike the gas sector, I expect NGLs will have a floor under them.”

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