The American Gas Association sees nothing but positives in the current gas supply situation despite the fact that inadequate supply in the face of strong demand growth has been behind the recent record increase in prices and expectations of more than $4 gas price averages this year.

Although some experts have concluded that supply could be constrained going forward because of changes in the character of the resource base (see Daily GPI, Feb. 20 and May 10), AGA said in a report released this week that the supply response to the record high gas prices last winter has been significant and will be more than capable of serving demand next winter.

“North America holds abundant supplies of natural gas, record numbers of natural gas rigs are actively drilling, gas well completions are expected to exceed last year’s levels and additional supplies of natural gas will be imported from Canada,” AGA said in its “Issue Brief on Natural Gas Supply Fundamentals June 2001.”

The report highlights trends in various supply indicators (natural gas resources, reserves, non-producing gas reserves, domestic gas production, gas rigs operating, natural gas well completions, working gas in storage, Canadian imports, liquefied natural gas imports, other supplementals and pipeline capacity).

The report notes that the Potential Gas Committee recently estimated that the gas resource base is expected to remain flat this year at 1,091 Tcf but has grown from 1,002 Tcf in 1990 even though 183 Tcf was produced from 1991 to 2000 (see Daily GPI, April 5). Gas reserves are estimated to grow to 170 Tcf from 167.4 Tcf in 1999 and 169.3 Tcf in 1990.

Domestic production is forecast to grow to 19.4 Tcf from 18.9 Tcf in 1999 and 17.2 Tcf in 1990. The number of gas rigs operating reached 913 in March up 53% from one year earlier. Gas well completion are expected to be more than 16,000 this year compared to 15,206 last year and 11,044 in 1990. Gas storage levels are rising sharply and “may well exceed the five year average for working gas in storage by Nov. 1…”

Canadian imports are expected to reach 3.6 Tcf from 3.5 Tcf last year and only 1.4 Tcf in 1990. And liquefied natural gas imports are expected to reach 225 Bcf this year from 220 Bcf last year and only 84 Bcf in 1990. Meanwhile, pipeline capacity is estimated to have reached 94 Bcf/d in 2000, up from 89.4 Bcf/d in 1998.

“These are very strong fundamentals, which indicate a solid market response by the gas industry to increasing customer demand for this efficient, domestic fuel,” said Chris McGill, AGA managing director of policy analysis.

“North America holds a vast supply of potential natural gas resources,” he added. “The challenge is producing natural gas in sufficient quantities to meet growing customer demand, and ensuring that the pipeline delivery system expands enough to get the gas where it’s needed.”

The full text of the five-page report is available online to those who subscribe to AGA’s “Stats and Studies” series (www.aga.org).

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