The Energy Information Administration (EIA) in its Annual EnergyOutlook 1999 released Tuesday is forecasting only a gradual 0.8%average annual rise in natural gas wellhead prices through 2020.Prices will go from $2.23/Mcf in 1997 to $2.68 in 23 years later.

While U.S. demand is expected to increase, especially forelectric generation, technological improvements in exploration andproduction will moderate the effect on prices, EIA said. Gas willincrease its share of the electric generation market, going from14% of generation in 1997 to 33% in 2020, but coal will still be inthe drivers’ seat as the chief generation fuel. More stringent NOxrequirements called for by the Clean Air Act Amendments of 1990 andthe ozone transport rule are more likely to be met by installingcontrol equipment on coal plants since the $2 billion annualizedcost is small relative to the $200 billion consumers spend onelectricity each year.

Meanwhile, EIA had no good news for the oil industry. World oilprices are expected to be affected by the recent Asian economiccrisis well into the next decade. The government information agencysaid the Asian flu had dropped price forecasts for 2000 by as muchas $5.50/barrel from earlier projections near $18/b. Oil prices arenot expected to fully recover until 2007 when they reach an averageclose to $20/b. Beyond that oil prices are expected to line up withprevious projections.

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