Power sector gas demand seen increasing 2% annually

Power sector gas demand seen increasing 2% annually

Toronto (Platts)--19Apr2006

Demand for natural gas by the North American power sector is likely to
grow at a rate of least 2% a year through 2015, speakers at a gas and power
conference in Toronto said Wednesday.

In remarks to EnerData's Gasfair and Powerfair conference, Craig Frew,
vice president of gas transmission East for TransCanada, said he expects a 20%
rise in gas demand from power generators on the North American
continent -- including Mexico -- through 2020, an increase that would
translate into a 17 Bcf/d rise in requirements.

Ben Schlesinger, president of the Benjamin Schlesinger & Associates
consulting firm, said he believes power sector demand will rise at an even
higher rate of 2.9% annually thorugh 2020.

Gas prices are being driven by this demand from power generators, Frew
said, and the market is going to be "very, very tight" for the next five to 10
years, with liquiefed natural gas imports eventually alleviating the
tightness.

In Ontario, Frew said, generators need to pursue fuel diversity or face
price spikes. Such spikes can be avoided if the provincial government develops
a "firm, long-term vision" of the market and sticks to that plan, he added.

Nevertheless, gas fired power plants in Ontario are going to "understand
what being on the margins means," with regard to both the cost of their fuel
supply and the price they will receive for the power they produce.

---Keiron Greenhalgh, keiron_greenhalgh@platts.com

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