Nick Snow
OGJ Washington Editor
WASHINGTON, DC, Oct. 5 -- Pressure on natural gas prices is likely to be flat this winter compared to last despite higher overall demand because of higher production, the Natural Gas Supply Association said as it released its 2010-11 winter outlook.
“We expect to see industrial demand coming back strong, and we also expect to see coal-to-gas fuel switching through the winter, if prices remain strong,” NGSA Pres. R. Skip Horvath said. Fuel switching has increased by 10% since it began in 2008 and has continued because of competitive gas prices, he indicated.
“Projections show domestic production among the highest levels in decades,” Horvath added. “Drilling activity has increased as the economy has improved.”
NGSA’s 2010-11 winter outlook said that data developed by Energy Ventures Analysis project 2.4% higher overall demand than a year earlier, with the strongest growth in power generation (7%) and industrial consumption (5%). Residential and commercial demand are expected to decrease, it indicated.
US supplies are also expected to grow as production approaches its highest level in decades, driven by onshore and shale activity, NGSA added, quoting data developed by ICF International. “Producers have responded to the challenge and have been actively investing and working,” said NGSA Chairman Steven P. Kirchhoff, who also is vice-president for the Americas of ExxonMobil Gas & Power Marketing.
NGSA’s forecast indicated that the US economy will probably continue its strained recovery, with concerns about high unemployment lingering as manufacturing shows some strength. It also projected robust storage, although not quite reaching last year’s record level, and nearly normal weather with a similar number of heating degree days as the 2009-10 winter period.
NGSA’s Oct. 5 forecast came a day after the American Gas Association, which represents local distribution companies, also predicted that supplies would be plentiful and prices would be reasonable this winter.
“Continuing investments in production, pipeline, and storage infrastructure, and applications for the most efficient direct use of gas has positioned our diverse supply sources to meet and even exceed expected demand during the coldest winter months,” AGA Pres. David N. Parker said.
Contact Nick Snow at [email protected].
Rystad Energy.
