GRI: U.S. gas use to increase, prices fall

GRI's Outlook for U.S. Gas Supply, Price [19299 bytes] Gas Research Institute predicts U.S. natural gas use will grow steadily by 2015 but wellhead prices will decline slightly. GRI's annual baseline projection said technology must be developed to enable prices to remain low and thus for gas to capture a larger share of the U.S. energy market. GRI predicted gas demand would grow from 21.6 tcf in 1995 to 30.2 tcf in 2015, with increases in all sectors. However, most growth would be in

Sept. 2, 1996

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GRI's Outlook for U.S. Gas Supply, Price [19299 bytes]

Gas Research Institute predicts U.S. natural gas use will grow steadily by 2015 but wellhead prices will decline slightly.

GRI's annual baseline projection said technology must be developed to enable prices to remain low and thus for gas to capture a larger share of the U.S. energy market.

Demand outlook

GRI predicted gas demand would grow from 21.6 tcf in 1995 to 30.2 tcf in 2015, with increases in all sectors.

However, most growth would be in the price-sensitive electric generation and industrial markets.

GRI expects gas to increase its share of the total primary energy market from about 24% in 1995 to 27% in 2015 but remain below the historical peak of 32% in 1971.

It said, "Improvements in gas technology have played a leading role in improving the outlook for natural gas. Over the last 10 years, gas consumption in the U.S. has increased from about 16 tcf to almost 22 tcf, and within the next year or two, it should exceed the historical peak level of consumption achieved in 1972."

Technology the key

GRI, which contracts for industry research and is funded through a surcharge on interstate gas sales, said, "The critical challenge for the gas industry is maintaining the momentum of technology improvement.''

It said, "One of the main reasons gas consumption is at near-record levels has been the significant success in the development and utilization of new gas technologies:

End use technologies that improve the efficiency of gas use and allow gas to enter new markets.
Supply technologies that increase the gas yield per unit of effort.
Gas operations technologies that enhance the efficiency of serving markets by better using both pipeline and storage capacity."

Prices, supplies

GRI said gas supplies are likely to increase almost 40% by 2015, although real gas prices will be the lowest since 1976.

It said technological advances should maintain the profitability of industry activity in current producing areas and support further expansions.

GRI contends the cost of drilling onshore wells will decline by more than a third and offshore wells by almost half during the forecast period. Success rates should improve, reducing the risk in exploring new areas.

The study predicts the estimated Lower 48 potential resource will jump from 1.54 quadrillion cu ft under current technology to 1.86 quadrillion cu ft with the technology to be developed through 2015. The Canadian resource is projected to rise from 630 tcf to 760 tcf.

"As a result of technologies developed to date and technologies expected to be developed over the next 20 years, the 1997 projection expects that almost as much reserves remain to be found in discovered fields as have been booked to date.

"More oil and gas remain to be discovered beyond the 200 m water depth in the Gulf of Mexico than has been discovered to date inside 200 m. Recoveries from coalbed methane and Antrim shale continue to improve."

GRI said despite the record production predicted, drilling activity will remain near or less than 9,000 wells/year through 2005 before beginning to rise to more than 14,000 by 2015.

"The relatively modest level of gas drilling activity largely reflects the record level of gas activity in the Gulf of Mexico. Reserve additions per well in the Gulf of Mexico average almost 10 times that for the average onshore well" in the forecast.

GRI said onshore reserve additions should continue to increase, reflecting a continued shift of industry activity to deeper sediments and a greater role of recompletions in industry activity. Offshore reserve additions will begin to decline late in the forecast period.

It said technology must continue to advance for gas supplies to grow, because by 2015 about 40% of U.S. gas supply will depend on the availability of new production. With no improvements in technology, GRI said U.S. supplies would grow through 2005 and then begin to drop.