Natural gas demand coming back faster than supply: analysts

Washington (Platts)--24Oct2005

Demand for natural gas is increasing faster than the recovery of
production supply from the Gulf of Mexico, energy analysts at investment bank
Friedman Billings Ramsey said Monday, pointing to long-term tightening in the
gas markets and upward pressure on gas prices. 

     "We remain bullish on the long-term outlook for the sector and believe
natural gas prices are supported by this balance and could potentially
increase with winter weather," analysts David Khani and Andrew Coleman said in
a note to clients Monday. 

     "There have been marked improvements in refinery, chemical and power
plants, with few damaged," the pair noted, in contrast with "the slow
improvement from supply and corresponding infrastructure (gas processing
plants, offshore pipelines and production facilities). We now estimate that
the year-end 2005 net impact of Katrina and Rita is 1.2 Bcf/d of demand
outstripping supply," Khani and Coleman said. 

     While the two stock analysts did not include a gas price forecast in
their note, they did say that companies heavily into gas production were
undervalued, with Wall Street pricing them as if gas were $6/MMBtu in contrast
to the $12/MMBtu to $13/MMBtu range of front-month futures prices on the NYMEX
gas contract.

                                     ---Bill Holland, bill_holland@platts.com

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