Wednesdaya resident and chief executive officer of MDU Resources Group, said : Natural gas price next morht forecast stable. Forecast background, U.S. storage levels are at their highest mark in 13 years,

“We’d all like to know how to predict prices,” said Terry Hildestad, who was in Billings to keynote the Montana Petroleum Association’s appreciation luncheon in conjunction with its annual meeting that began Monday.

Natural gas futures dropped early this week as a result of the storage figures, limited demand and no current threat to production in the U.S. Gulf of Mexico. Natural gas stocks were pegged at 2.93 trillion cubic feet, the highest storage mark in 13 years. The September natural gas price Monday closed at $5.38 a million British thermal units. A Btu is a measure of heat in an energy-producing commodity such as gas, oil or coal.

Hildestad said MDU purchases very little natural gas on the spot market, with its supply coming from its own production and a mix of short- and long-term contracts.

He pointed out that natural gas suppliers pass the cost of gas directly through to the consumer and make no profit on the commodity itself.

In Montana, natural gas companies MDU and NorthWestern Energy file each month with the Montana Public Service Commission the cost of natural gas, said David Burchett, a rate analyst with the PSC.

They file notice to the commission of the increase or decrease in the cost of the gas, and that is put into the rate tariff, he said. Usually, the rate is changed only if it amounts to 10 cents a dekatherm or more, Burchett said. Each year, the commission completes a “true up” with the companies to determine how accurate their price projections were.

“The monthly filing is to provide proper pricing signals to the public at the time of use,” he said. “To determine that the gas was prudently purchased.”

Burchett emphasized that gas companies pass through the cost of gas to customers and that their revenue comes from the transmission and distribution of the product.

“They are entitled to recover their cost,” he said. “If the price of gas jumps from $6 a dekatherm to $9, a delay would be harmful.”

The importance of the monthly “tracker” is that the public notices what it costs for the gas use. The monthly tracker is given interim approval by the commission, with final approval given following the annual “true up,” he said.

Asked if the current market capitalization of NorthWestern at $950 million was enticing to MDU as a possible takeover target, Hildestad smiled.

“We just bought Cascade (Natural Gas Corp.), which operates in Washington and Oregon,” he said. “We just completed that, and integrating it is our primary focus now.”

In reference to NorthWestern, Hildestad said MDU had looked at it previously, but found that it was “not a value at the time.”

This summer, the PSC unanimously rejected approval of an offer by an Australian company to buy NorthWestern for $2.2 billion. Since then, NorthWestern officials have indicated they are no longer interested in selling.

MDU’s market capitalization is now $4.84 billion. It provides electrical and natural gas to customers in North Dakota, Eastern Montana, northern and western South Dakota and northern Wyoming. In addition to its utility and natural resource businesses, it is engaged in construction materials and mining and construction services.

In his speech, Hildestad said the competing interests of the energy industry, the economy and the environment must be governed by a balance of the three.

Acknowledging a role for alternative energy forms, Hildestad said “there is no magic, silver bullet” to reduce the nation’s dependence on foreign oil sources. While consumers might wish for simple answers, the complexity of the issues involved preempts that, he said.

“We need to solve the problems without inflicting damage on our economy and lifestyle,” he said.

Hildestad said the Montana oil and gas industry ought to be celebrating its recent successes, noting that it should take credit for its contributions to the large budget surplus in the state’s general fund.

Oil and gas development in Eastern Montana over the past five years has produced a boom in several counties and is part of the Rocky Mountain region providing 25 percent of the country’s on-shore production.