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Digital and Power Needs Overload Energy Co.'s

Digital and Power Needs Overload Energy Co.'s

The booming digital economy and a thirst for electricity generation are driving an ever-expanding demand for natural gas, which in turn is pushing companies to find and produce energy at a pace they can barely keep up with, according to Coastal CEO David Arledge.

Arledge, who spoke to a joint meeting of the Houston Association of Professional Landmen and the Houston Producers Forum last week, said that in the "battle to fuel electric generation," natural gas has "won," based on many factors: lower cost, quicker turnaround in plant construction and customer choice for more efficient, clean energy.

"No one can assess the effect of the demand for power generation," said Arledge. Estimates project gas demand for power, including "new economy use," will more than double to 31 Bcf/d by 2010. That would mean that the Gulf of Mexico's current output of 14 Bcf/d would have to be "more than duplicated" in the next 12 years.

Everyone, including pipeline companies, midstream companies and U.S. and Canadian producers, will have to increase their efforts to meet the demand, said the Coastal CEO.

"It has been estimated that the pipeline business will have to spend around $34 billion to maintain, expand and prepare storage for our customers." He said companies will have to expand existing long-line transportation, increase midstream capacity and add more storage --- along with obtaining more regulatory flexibility --- to meet the market's growing demands.

Looking into his crystal ball, Arledge also predicted that in the near future, digital companies will have two lines: one a traditional power line connected to a regional power grid, and a second line to fuel on-site generation of power for power supply disruptions.

And even though the lines won't come cheaply, he said the companies installing them will do it gladly. "Companies are willing to pay a substantial premium" to increase their reliability."

Carolyn Davis, Houston

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