US gas supplies likely to remain tight through 2006

US gas supplies likely to remain tight through 2006, analyst says

Washington (Platts)--10Sep2004


Natural gas supply and demand in the US is likely to remain in tight balance
at least until 2006, according to the latest study by Energy Ventures
Analysis. Because gas prices currently are "set by the marginal customer
rather than the cost of supply," the Arlington, Virginia-based analyst
predicted gas prices will average about $5.02/MMBtu in the 2000-2006 period,
dropping to $3.55/MMBtu in 2007-2010 period and falling to $3.21/MMBtu in the
2011-2015 timeframe. period. From 2016 to 2020, EVA estimates gas prices will
rise to about $3.87/MMBtu, and will climb to $3.98/MMBtu from 2021 to 2025.
Industrial demand has taken the hardest hit from the higher prices, declining
3.2 Bcf/d in response and "likely will remain flat for several years before
resuming modest growth after gas prices moderate," the report said.

Through 2025, the largest growth in demand will come from the power generation
sector, because of "a combination of economic growth and gas' dominance in new
capacity additions." But because US production has declined 3.1 Bcf/day over
the last 30 months, gas users will have to turn to "emerging resource areas"
to fill their demand, including liquefied natural gas, the deep-water Gulf of
Mexico, coalbed methane, and new Canadian and Arctic supplies, the report
said.

This story was first published in Platts real-time news and market reporting
service Platts Natural Gas Alert (http://naturalgasalert.platts.com ).

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