yahoo.reuters.com
U.S. natgas supply concerns dominate conference
Wed Jan 19, 2005 05:14 PM ET
By Mark Babineck
HOUSTON, Jan 19 (Reuters) - The U.S. government must loosen restrictions on domestic exploration to prevent a natural gas crisis in the next generation, the chief executive of a production company told an industry conference on Wednesday.
Citing forecasts that have annual domestic consumption growing to around 30 trillion cubic feet per year by 2025, up from around 22 trillion cubic feet currently, Questar Corp. (STR.N: Quote, Profile, Research) head Keith O. Rattie demanded change.
"I don't know anyone in the industry who believes we will (support) 30 trillion cubic feet if we stay on our current path," Rattie said at the Platts Natural Gas Outlook 2005 Conference in Houston.
Passionately at times, Rattie said a U.S. energy bill must be "rooted in reality" that the nation will be dependent on fossil fuels for decades to come because greener solutions are not close to commercial viability.
"We don't have the luxury of blacklisting certain sources of energy some groups find objectionable," Rattie said.
The first day of the two-day conference focused on supplies, both near-term and long-term.
While Rattie agreed that future supply augmentations by liquefied natural gas and production from the Mackenzie Delta in Canada and Alaska, via yet-to-be-constructed pipelines, would be helpful, he also argued that further exploration in the lower 48 states was needed.
"California and Florida account for 15 percent of natural gas usage but drilling is banned off their coasts," said Rattie, who argued for the ability to drill such areas once reserves are established.
Later, consultant James S. Diemer caused a minor stir with his forecast that heightened LNG imports in the next five years will cause natural gas prices to steadily decline to around $4 per million British thermal units.
"Eventually we see things bottoming out and we see prices rising again," said Diemer, vice president of Pace Global Energy Services.
Aubrey K. McClendon, chief executive officer of Chesapeake Energy Corp. (CHK.N: Quote, Profile, Research) , a major independent natural gas producer, called the forecast "fanciful."
"That price in my view is impossible," said McClendon, who said if he and his competitors came to believe the price was headed that far south, economics would dictate a stop to drilling.
"You'd see the rig count drop from 1,200 to 500 in nine months," McClendon said.
Because much of the impending surge of LNG will arrive on long-term contracts, it will form the supply base with traditional domestic production acting as the margin, said industry analyst Ed Kelly of Wood Mackenzie.
© Reuters 2005. All Rights Reserved. |
