Where once producers’ biggest worry was whether they would get adecent price for their gas, the concern now is whether they canproduce enough to meet market demands.

Tom Brown Inc. President James D. Lightner predicts prices willremain “healthy” over the next three to five years, “solidly above”the $3 level, yet volatile. Speaking to a Rocky Mountain NaturalGas Investment Forum Tuesday in Denver, Lightner said he was moreconcerned about having enough supply to meet gas demand in theyears ahead.

“Gas production is having a real challenge. All of theseincreased drilling rigs are going to be great, and we need that,but it’s not going to provide this super big gas bump that’s goingto take care of all the demand problems.” Production in Wyoming andthe San Juan Basin is flat, he said.

“There’s a lot of people who think the Rockies have moreresource potential [than other regions]. The question is, can youfind it and make money on it? These deep basins all have huge gaskitchens in the bottoms. In 1995, we got 95 cents. You can’t doanything with that. This stuff that’s deep is expensive to go get.”Tom Brown produces coal-bed methane (CBM) gas in the Powder RiverBasin at “deeper depths than anybody understands,” and at expensivecosts.

If the market drops those costs would not be covered. “I’ll bethe first to say if gas prices went back to $1.50 Nymex, theRockies would be one of the first places I think that would slowdown,” Lightner said. But he’s not expecting this to happen anytimesoon. “I really think that the entire U.S. has entered into anentirely different era of natural gas prices than it’s seen in thepast,” he noted.

The Denver-based independent producer also is drilling andexploring for natural gas and oil in the Wind River Basin, Andy’sBasin, White River Dome, Permian Basin and Piceance. Its productionduring the first quarter of this year was 158 MMcfe/d.Lightneranticipates the industry should be “really [be] surprised” by thecompany’s volumes for the second quarter. “We have a much betterquality of portfolio, a more diversified portfolio than thiscompany has ever had,” he noted.

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