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AGA Sees Up to 3 Bcf/d of Gulf Gas Output Offline This Winter

Up to 3 Bcf/d of Gulf natural gas production that is currently shut in could remain offline during the winter heating season, a top official with the American Gas Association (AGA) said last Tuesday.

If correct, that would mean that more than half of the 5.65 Bcf/d of Gulf gas production that the Interior Department estimates is still shut in would continue to be out of commission during the winter months. The Energy Information Administration (EIA) projects that 2.1 Bcf/d of Gulf gas production will remain shut in through December. The Natural Gas Supply Association (NGSA), which represents major producers, expects about 2-2.5 Bcf/d of Gulf production to be out of commission during winter, but it sees consumers' conservation efforts cutting demand by about 3.5 Bcf/d, which would more than offset the daily production losses from the Gulf (see related stories).

The AGA, which represents gas utilities, believes inventories of natural gas will be adequate to meet demand this winter, said Paul Wilkinson, AGA's vice president of policy analysis, at a press briefing in Washington, DC. The NGSA shares that belief. Wilkinson projects that gas in storage will be at or near 3.2 Tcf by Nov. 1, a level that is considered comfortable by the gas industry to satisfy winter demand. Other industry experts question whether the 3.2 Tcf level will be reached this year, however.

Natural gas in storage was estimated at 2.987 Tcf for the week ended Oct. 7, which was 162 Bcf less than last year at this time, but 34 Bcf above the five-year average. The winter heating season starts in two weeks.

The AGA called last week's briefing to "get out in front" of the EIA's annual winter fuels outlook, which was released on Wednesday (see related story).

Like the EIA forecast, the AGA expects that natural gas heating bills for most U.S. households will be up 50% over last year, noted Roger Cooper, executive vice president of policy and planning for the utility group. The price hike could be even more dramatic in the Midwest -- 70% or more -- if the upcoming winter weather is colder than normal, he said.

The group estimates that the average heating bill for residential customers likely will be $1,000 during the 2004-2005 heating season, compared to approximately $650 last winter.

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