BP natgas exec says prices "need" to stay high

CHICAGO (Reuters) - A senior executive for BP Energy (BP.L) North America said Wednesday natural gas prices need to remain in their current range near $11 per million British thermal units in order to support necessary investment in infrastructure and promote further development.

Brian Frank, president of BP North America Gas and Power, told participants at GasMart on Wednesday that the industry is facing enormous challenges as current market dynamics show unprecedented commodity values, U.S. dollar weakness and relatively unstable financial markets.

But as emerging economies like India, China and South America compete for global energy supplies of liquefied natural gas, the United States has a growing need to invest in domestic energy production and infrastructure.

"A big deal is being made that BP in the last five years made $35 billion (17.7 billion pounds). What isn't being discussed is that we invested $35 billion in the U.S. alone in those five years, $7 billion last year with half of that in renewables," Frank said.

Frank said if investment did not continue, the price impact if there is a "break in the supply chain" would be even more dramatic than the market is currently seeing.

New York Mercantile Exchange natural gas futures rose Wednesday to near $11.74 per mmBtu, just below last week's contract high and 28-month spot chart high of $11.794.

Prices have also rallied more than 25 percent in the past two months, buoyed by record high crude futures, concerns over low end-winter inventories and the Independence Hub production platform outage in the Gulf of Mexico that has trimmed supplies by nearly 1 billion cubic feet per day.

But Franks said natural gas prices, when compared to other competing fuels like heating oil and residual fuel, remained on the low end of the price scale. "Even at current levels, natural gas is probably one of the cheapest commodities on the globe," Frank said.

Franks also reiterated on Wednesday that BP's Thunder Horse platform in the Gulf, which suffered severe hurricane damage in 2005, was expected to be online by year's end.

(Reporting by Eileen Moustakis; Editing by Gary Hill)