Natural Gas

With all eyes on Capitol Hill as Congress continued to wrestle with the economic crisis, there was some good news in a report from the Natural Gas Supply Association.

An analysis indicates that natural gas production in the U.S. this winter is expected to be about 8% higher than last year, says Patrick J. Kuntz, the association’s chairman and vice president of natural gas and oil sales for Marathon Oil Co.

“In response to what continues to be a tight energy market, natural gas producers have responded to market signals, resulting in a forecast for natural gas production to reach the highest levels since the early to mid-1970s,” Kuntz says. He adds that a great deal of the stability in the gas marketplace is there because of “billions of dollars” the industry has spent to get the natural gas to market.

“More wells will be completed this winter–nearly double the amount of wells from just six years ago and nearly 750 more than last year,” Kuntz says. “In addition, technological advances in drilling and completion methods are proving to be very successful in improving resource recovery.”

He adds that other factors affecting the natural gas market for the upcoming winter: warmer than predicted weather, the economy, mild growth in natural gas demand and relatively higher natural gas storage levels.

“Federal forecasters anticipate this will be a slightly warmer than normal winter with about the same number of heating degree days as last winter,” Kuntz says. “However, this is the most difficult factor to predict, and the severity of winter weather may likely have the biggest, single impact on the market.”

The association noted that lat year, for the first time, the electric generation sector exceeded the industrial sector’s annual demand for energy. Kuntz says another forecast is for that to happen again this year.

“As utilities build plants to generate electricity, they are increasingly choosing clean-burning natural gas,” Kuntz says. “Natural Gas now fuels about 20% of the nation’s electrical generating capacity and that consumption is expected to grow again this winter.”

The association’s study noted that last winter, the industry went into the heating season with 3,545 billion cubic feet of inventory. This year, the association expects the another healthy storage inventory.

Kuntz did have a cautionary note, though.

“For some end-users, though, it is important to note that many will still be feeling the effects of higher prices from this past summer,” Kuntz says, “making household efficiency and conservation as important as ever.”

Stay tuned. More to come. Just several months ago, a news program was suggesting people begin saving their money to help pay for their winter utility bills. Can’t predict the weather, but will say that a lot of people will be looking at the association’s report.

–John A. Sullivan, News Editor, Oil and Gas Investor, www.OilandGasInvestor.com, jsullivan@hartenergy.com

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