Atlanta (Platts)--17Apr2012/405 pm EDT/2005 GMT

There are no immediate ways to boost natural gas consumption to relieve the gas glut the US has found itself with following a mild winter, several energy officials said Tuesday.

Noting the record amounts of gas in storage and still being produced at prolific rates in various parts of the US, speakers at the LDC Gas Forum Southeast in Atlanta said most of the expected increase in gas demand will not be online for several years.

Bert Kalisch, president and CEO of the American Public Gas Association, said "consumers should not rejoice" in extremely low gas prices and declining rig counts, since gas needs to be affordable for both consumers and producers to encourage industry growth.

Kalisch said growth in demand from the residential and commercial sectors, power generation, natural gas vehicles and industrial uses could step into the breach in the future, but when it comes to immediate demand, he said he did not know where growth could be found.

"I wouldn't even try to speculate on that, but we certainly came out of the winter with more natural gas than we've ever had before, we're still producing natural gas at quite high levels and we're going to be reaching capacity [sooner than] ever before," Kalisch said.

LNG exports have been discussed as a way to balance the market in the future, but Kalisch said he and the APGA oppose exporting domestically produced gas. Domestic gas reserves offer a chance to move away from the dependence on imports, he said.

"Let's not fumble away this opportunity," Kalisch said.

Tom Ruck, senior structured products originator for gas and power with ConocoPhillips, also acknowledged oversupply was an issue and warned that the low price environment could influence international capital to leave the US and choose to invest in countries where returns could be greater. Weak gas price margins could also squeeze some producers, he added.

One of the only possible immediate increases in gas demand comes from power generation, said Dawn Constantin, head of partnerships and analytics for BP. A hot summer would increase power and gas demand, and low prices are making gas a more attractive fuel. That demand, however, is largely driven by uncontrollable Mother Nature, she said.

"I think the one thing we have to keep in the back of our minds [is that] the coal industry is responding," Constantin said.

As coal demand falls, effectively lowering its price, it once again could become more competitive with gas. "Potentially the relationship between coal and gas keeps fluctuating," Constantin said.

--Elizabeth Bassett, elizabeth_bassett@platts.com

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