GRI FORESEES FLAT U.S. GAS PRICES

The outlook for U.S. natural gas is not as bright as previously thought.

Gas Research Institute (GRI) last week reported at the Society of Petroleum Engineers meeting in New Orleans that it projects the price of natural gas to remain essentially flat at an average $2.39/Mcf in 1994 dollars until 2010.

This is a major decrease from GRI's 1993 outlook, which had the price going to well over $3/Mcf by 2010. Competing energy sources such as coal and imported oil have chilled the outlook, said Kent F. Perry, GRI group manager, drilling and completions.

Even so, 489 tcf of U.S. reserves will be added by 2010 while supply climbs to 27.9 tcf in the Lower 48 states. Canadian imports and a small amount of LNG make up part of the supply.

How can the U.S. industry increase supply about 40% while the price stagnates? Perry says the short answer is increased efficiency.

GRI reckons improved technology could add about 10.7 tcf to U.S. supply in 2010, compared with the volume available with 1990 technology (see chart).

Technology, Perry says, is working on two fronts. It is increasing the size of the resource and lowering the cost of drilling.

Slim holes, horizontal drilling, and 3D seismic methods are examples of technologies that will be used. He points out that the Overthrust Belt, Gulf of Mexico subsalt reservoirs, and deepwater gas were not known or considered 20 years ago when the volume of U.S. technically recoverable gas was estimated at 900 tcf.

Today, the figure is 1.2-1.3 quadrillion cu ft.

Perry admits it will be a daunting job to meet the supply projection. Although he believes it is possible, he does not describe the development as probable.