Post on 09-Jul-2020
AmericaAmerica’’s Natural Gass Natural GasMarket ChallengeMarket Challenge
American Gas Association2004
North American supply/demand balance is and will remain tight.
Gas consumption grows.
North American Gas Market
Gas prices remain relatively high.
High levels of price volatility continue.
Source: Energy and Environmental Analysis (EEA)
Gas Consumption (Trillion Cubic Feet, Tcf)
0
5
10
15
20
25
30
35
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
Residential
Commercial
Industrial
Power Generation
Other
Gas Demand Outlook
Lower-48 Dry Gas Production vs Dry Gas Productive Capacity
40
45
50
55
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05
Bcf
d
Gas Production Productive Capacity
Source: Energy and Environmental Analysis
LowerLower--48 Annual Gas Production48 Annual Gas ProductionBy Region 2000By Region 2000--20092009
Source: Lippman Consulting, Inc., AGA
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Year
Trill
ion
Cubi
c Fe
et Gulf of Mexico
Gulf Coast
Mid- Continent
Rocky Mountain
Permian
San Juan
Eastern US
West Coast
U.S. Annual Percentage of Gas vs. Oil Rigs Operating
Source: Lippman Consulting, Inc.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Percent of Gas Rigs
Percent ofOil Rigs
Production Response From Increased Drilling Has Been Modest
(NPC 2003)
Lower-48 Gas Production and Rig Count
0
10
20
30
40
50
60
1990 1992 1994 1996 1998 2000 20020
200
400
600
800
1000
1200GAS PRODUCTION
RIGS
BC
FD
GA
S R
IGS
21TCF
346TCF
31TCF
43TCF
100%100% 40%40%
100%100%
56%56%
RestrictedPercentage
Major Portions of the Gas Resource Base Are Not Accessible
Approximately 29 trillion cubic feet (TCF) of the Rockies gas resources are closed to development and 108 TCF are available with restrictions.
Canadian Marketed ProductionCanadian Marketed ProductionAnd Net Exports to US 2000And Net Exports to US 2000--20092009
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Trill
ion
Cubi
c Fe
et
Marketed Prod.Net Exports to US
New Supply Must ComeFrom New Areas…
Rockies
Arctic G as
D eep GulfD eep GulfD eep Gulf
LNGLNGLNGLNGLNGLNG
$3.25 - $3.50$3.25 $3.25 -- $3.50$3.50
…But Will Only Come at a Price that Supports
Development.
…But Will Only Come at a Price that Supports
Development.
Source: CMS Panhandle Companies
LNG Imports and Import CapacityLNG Imports and Import Capacity20002000--20092009
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Trill
ion
Cubi
c Fe
et
LNG L-48 ImportsLNG Import Capacity
Proposed North American LNG Terminals
03,0006,0009,000
12,00015,000
= 50 - 399 M Mcf/d Capacity
= D irection o f F low
= Bi-directional
Capacity (in M illion Cubic Feet per Day) as of Decem ber 31, 2002
Operating
Proposed Onshore
Proposed Offshore
A rcticIs lands
M ackenzieD elta
N orth S lope
N orth A sia3 ,600 m iles
LN G
S outhernC aliforn ia
M idw estN ortheast
W C S BB aja, C alifo rn ia
2 ,500 m iles
B aja ,C alifo rn ia
Mackenzie Valley
ANGTS
Northern Gas Market Options
Alaska
Total LowerTotal Lower--48 Gas Supply48 Gas SupplyBy Source 2000By Source 2000--20092009
Sources: Lippman Consulting, Inc., AGA, CAPP
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Trill
ion
Cub
ic F
eet
Low er-48 ProdCanadaLNGTotal Low er-48
CRITICAL SUPPLY ISSUESCRITICAL SUPPLY ISSUES–– TRADITIONAL SOURCESTRADITIONAL SOURCES
LOWER-48Declining ProductivityAccess – Real vs PerceivedMoratoriaTakeaway CapacityDeepwater Activity Level
CRITICAL SUPPLY ISSUESCRITICAL SUPPLY ISSUESNON NON –– TRADITIONAL SOURCESTRADITIONAL SOURCES
LNGWorld View vs “Imports are Bad”NIMBYSafety perception
ALASKAJustifiable Subsidy?Timing?
U.S. Natural Gas Spot PricesU.S. Natural Gas Spot Prices(Base Case and 95% Confidence Interval*)
Sources: History: Natural Gas Week; Projections: Short-Term Energy Outlook, May 2004.
0.0
2.0
4.0
6.0
8.0
10.0
12.0Ja
n-99
May
-99
Sep-
99
Jan-
00
May
-00
Sep-
00
Jan-
01
May
-01
Sep-
01
Jan-
02
May
-02
Sep-
02
Jan-
03
May
-03
Sep-
03
Jan-
04
May
-04
Sep-
04
Jan-
05
May
-05
Sep-
05
Monthly
Dol
lars
per
Tho
usan
d C
ubic
Fee
t
Projections
*The confidence intervals show +/- 2 standard errors based on the properties of the model. The ranges do not include the effects of major supply disruptions.
Regarding U.S. Gas Supply and the role of LNG and/or Alaska……
There is no Plan B!
Marie Fagan (CERA)
POTENTIAL GAS SUPPLY vs. POTENTIAL GAS SUPPLY vs. CONSUMPTION, 2004CONSUMPTION, 2004--20082008
1819202122232425262728
2004 2005 2006 2007 2008
Tcf
Consumption Supply
What Can We Do?Short-Term Options
Encourage natural gas storageEncourage payment programs including fixed-price contracts and budget and levelized billing Promote energy efficiency and conservationEncourage diversified gas supply portfolios, hedged and fixed-price purchasesEncourage LIHEAP funding
What Can We Do?Longer Term Options
Natural gas is plentiful in AmericaEncourage balance between economic and environmental valuesEncourage Alaskan supplyEncourage LNG supply