Industrial sector holds key to boosting natural gas demand

The industrial sector may hold the key to the floodgates on natural gas demand in the US, which has ample gas supplies, according to Energy Security Analysis Inc. Industrial demand will likely revive in the second quarter after falling off during mid-2000 when the economy began to weaken, Wakefield, Mass.-based ESAI said.

Feb. 21, 2002

By the OGJ Online Staff
HOUSTON, Feb. 21 -- The industrial sector may hold the key to the floodgates on natural gas demand in the US, which has ample gas supplies, according to Energy Security Analysis Inc.

Industrial demand will likely revive in the second quarter after falling off during mid-2000 when the economy began to weaken, Wakefield, Mass.-based ESAI said.

ESAI added it "expects that chemical and fertilizer producers, for whom natural gas is a raw material accounting for 75-90% of the cost of production, may intensify a trend begun last October and November of unshuttering production facilities to take advantage of low natural gas prices."

ESAI Senior Analyst Mary Menino said, "With current gas prices hovering around $2/MMbtu, US gas supplies should be competitive with foreign gas sources supplying overseas chemical and fertilizer capacity.

"This should induce owners of US capacity to reopen their plants," she said. "If the economy revives by spring, we would expect general industrial gas demand to begin to expand."