Recent mild weather is expected to only temporarily slow growing U.S. demand for natural gas, which has grown 14% since 1990 and this year is expected to exceed the record 22.1 tcf set in 1972.
That is the view from the U.S. Energy Information Administration.
EIA said that, by 2020, U.S. consumption is expected to increase by 50% over 1998 levels, fueled largely by use in electric power generation. Use of natural gas by U.S. electric utilities has grown by 17% since 1990 and by 22% since 1994.
"Gas has become the fuel of choice for most new and planned electric generating units, as new gas-fired generating technologies offer lower initial costs, higher efficiencies, and less adverse environmental effects compared with generation from other fossil fuels," EIA said.
Demand rise spurs change
EIA said the increase in demand for natural gas over the last decade has brought about substantial change in the North American natural gas industry."New producing areas are being developed, investment in new pipeline transportation capacity has increased, and new technology and a growing competitiveness within the industry have broughtellipsemore efficiency."
While growth in gas demand is expected to continue, EIA said there are signs that the rate of increase may slow in the short term.
At the same time, EIA said, "The drop in the world oil market over the last several years has begun to affect the amount of gas produced in association with oil production, and the drop in oil exploration and development owing to the soft market could influence the growth in future natural gas production."
It said that, despite those short-term trends, additional gas reserves and supplies are being developed in the deep waters of the Gulf of Mexico, in the coal beds of the Powder River basin, and in other areas of the Rocky Mountains.
"Gas pipeline service capacity is expanding, and new routes are being developed to bring this new production to market. In 1999 and 2000, as many as 70 major pipeline projects could be completed, adding 20 bcfd of new capacity to the national gas pipeline network at a cost of more than $10 billion. As much as 3.7 bcfd of that capacity would extend from Canada to the U.S."
Supply sources
EIA said that Canadian imports have been the fastest growing contributor to U.S. natural gas supply. During 1994-98, they increased 18%, or 463 bcf, while U.S. production increased only 1%."Nevertheless, expanding development in the Gulf of Mexico and greater onshore development of major natural gas fields should keep domestic production competitive with imports over the near term."
EIA said that long-term development of technology for commercial recovery of methane from natural gas hydrate deposits could provide a significant new source of gas supply. It said that recovery of only 1% of the hydrate resource would more than double the U.S. gas resource base.
"The mild weather seen over the past few years in several regions of the nation has already put a damper on some plans for expansion of underground natural gas storage capacity.
"The bright spot for storage expansion has been the anticipated development of several major new pipeline systems in the Northeast that need tie-ins to storage facilities for operational purposes and to serve their shipper customers. Some of this development could stall if these new systems fail to materialize because of competitive or regulatory forces."
Copyright 1999 Oil & Gas Journal. All Rights Reserved.
