New Orleans (Platts)--29Apr2009

The natural gas industry will emerge as a major winner in the next two
decades if US President Barack Obama succeeds in pushing through cap-and-trade
emissions legislation, a former US government energy official said Tuesday.

"Coal now accounts for roughly 50% of electrical power (in the US)," said
Guy Caruso, former head of the US Energy Information Administration, at CWC's
Americas LNG conference in New Orleans. "If a (cap and trade) bill passes,
coal will fall to below 40%."

Despite Obama's push for increased use of renewable energy, much of that
slack would have to be taken up by gas-based generation or nuclear power,
since renewables would likely continue to have a relatively small share of the
market, said Caruso, who is now senior adviser at the Center for Strategic and
International Studies.

"If nuclear power grows by a small amount, natural gas will be a big
winner in the 2010-30 period," Caruso said. "My personal view is that's
probably how it will all play out, even though the Obama administration is
very cautious about supporting any fossil fuel.

"Even with aggressive targets for renewables, you would still need
natural gas to play an important role," Caruso said.

The EIA's latest long-term outlook to 2030 does not share the same
optimism for the gas industry because "it is not allowed to speculate" about
possible cap-and-trade legislation, Caruso said.

Under that long-term outlook, coal would still account for 50% of US
electricity generation in 2030 and gas would remain relatively stead at
22-23%, Caruso said. Renewables would grow at the faster rate, to about 20% in
2030 from the present level of about 10%, according to a chart Caruso showed.
US gas consumption through 2030 would be met by a combination of conventional
domestic production, unconventional domestic production, LNG imports and
Alaskan gas, according to the EIA outlook.

Unconventional production from tight sands, shale plays and coalbed
methane would account for 55% of US consumption in 2030, according to the
outlook, said Caruso.

US LNG imports would peak at 1.6 Tcf in 2016-17 and then steadily fall to
about 1 Tcf by 2030, the outlook said. By next year, the US would have about 5
Tcf/yr of regasification capacity, he said.

EIA's projections of what sources would meet US gas consumption through
2030 are based on the assumption gas prices would be relatively stable and
show an overall increase, Caruso said, which would encourage production of
non-conventional plays. EIA projects the US gas price would be about
$8.40/MMBtu in 2030 in current dollars, which would be more than $12/MMBtu at
that time, he said.
--Ron Nissimov, ron_nissimov@platts.com