1/11 16:31 Natural Gas Industry Sees Strong Demand Through 2015 By Liz Skinner
Washington, Jan. 11 (Bloomberg) -- U.S. demand for natural
gas is expected to grow by 2.6 percent a year during the next 15
years, largely because of growing electricity generation needs,
an industry group said.
The natural gas share of total U.S. energy consumption also
will rise during that period, to more than 28 percent of the
energy mix by 2015, up 5 percentage points from 1998, according
to an annual study by the Gas Research Institute, a nonprofit
industry research group.
Gas supply increasingly will rely on more production from
the deeper waters of the Gulf of Mexico and increased Canadian
imports, the authors of the report said today in Washington.
``These two sources will become the pillars of supply
necessary to meet growing gas demand,' said Paul Holtberg, a GRI
group manager who worked on the study.
Other energy sources in the mix include petroleum, which the
study said will fall 2 percentage points to 37 percent in 2015;
coal, predicted to drop 1 point to 22 percent; nuclear, to drop 3
points to 5 percent; and renewable energy sources, which are
expected to increase 1 percentage point to 8 percent of energy
consumption, the report said.
Holtberg said gas prices will have to be competitive to meet
these growth projections. He said he expects gas prices to remain
relatively high through 2000, because the 1998 oil price collapse
discouraged new exploration for gas.
He said higher oil and gas prices in 1999 and 2000 will
accelerate drilling activity.
Natural gas futures are up 4 percent this week on
expectations that cooler weather forecast for the U.S. Northeast
next week could boost demand for the No. 1 U.S. home-heating
fuel. Still, prices are down about 10 percent in the past month
because high temperatures have reduced demand.
Electric Power
The greatest potential for gas growth is electric power
generation, which will account for about 50 percent of the total
growth in gas demand from 1998 to 2015, the report said.
Industrial non-electric power generation applications represent
the second-greatest potential for growth for gas, according to
GRI.
``Natural gas utilities are increasingly interested in
distributed generation, where they generate electricity at the
site of its use,' said Peggy Laramie, spokeswoman for the
American Gas Association, which represents local natural gas
utilities. ``It's popular for industrial customers, increasingly
popular for commercial customers and will be used for homes
before too long.'
Risky
Holtberg said the gas industry's increased reliance on
electricity generation as the basis for demand growth is risky
because of the changing operation and structure of the electric
industry. It is being transformed from an industry dominated by
regulated utilities to one of decentralized, unregulated power
generators.
Gas companies will need to make significant investments in
storage and pipeline capacity and revise standard gas industry
operational practices to reduce the risk, Holtberg said.
``Improvements in technology will play a pivotal role in
helping gas producers meet the projected demand,' he said.
The GRI report estimates total U.S. energy consumption will
grow by an average 1.3 percent a year for the next 15 years. |
