AGA predicts record gas demand for 1999

The American Gas Association projects that U.S. gas consumption will reach a record 23.2 quadrillion BTUs (quads) in 1999.

Richard Terry, chairman and CEO of Peoples Energy Corp., Chicago, and the new AGA chairman, said an anticipated return to normal weather patterns should put the industry back in line with the growth pattern of the past decade.

He said U.S. gas consumption fell 2% in 1998 because-based on the first 10 months of the year-it was the second warmest year on record since 1895.

1999 growth

Terry said most of the growth in 1999 will occur in the residential market, where AGA expects a 13% increase to 5.3 quads.

"More than two of every three new homes built in the U.S. in the past few years feature natural gas heat. With this high growth rate, gas utilities are projected to reach 56 million homes by the end of 1999, up from 55 million in 1997."

He said 90% of AGA's projected increase in residential demand for 1999 is attributable to the weather, with the rest due to the increased number of residential customers.

AGA predicts modest increases in industrial gas use for 1999, to 8.9 quads from 8.8, based on an assumption of continued sluggish manufacturing output, as well as the continuation of low oil prices, which may encourage some switching from gas to oil by plants.

"Yet, even with only modest growth, the industrial sector remains the single largest natural gas consumer in the U.S., using more gas in 1998 than the residential and commercial sectors combined. In fact, gas now accounts for nearly a third of all industrial energy consumption."

AGA's projections for 1999 assume slightly cooler-than-normal weather, a growth rate of 2.1% in the U.S. economy, and oil prices averaging $13/bbl.

Supplies

Terry said gas supplies will be more than adequate for the 1998-99 winter heating season, because working gas in underground storage was 96% full for the week ended Dec. 4.

AGA said, "The restructuring and unbundling of services in the gas industry in recent years has likely enhanced the process of supplying gas to customers at competitive prices."

It said a conservative estimate is that industry could supply 2.608 tcf/ month this winter, exceeding the historic peak consumption of 2.574 tcf in January 1996.

Of the 2.608 tcf, AGA said 1.625 would come from conventional production, 750 from LNG/underground storage, 13 from supplemental sources (synthetic natural gas, propane-air, and refinery gases) and 270 from Canadian and LNG imports. About 50 bcf would be injected into storage or exported.