Growth lies ahead for the North American gas industry as do anumber of risks and challenges, according to the just released”North American Natural Gas Trends 2000,” a joint report of ArthurAndersen and Cambridge Energy Research Associates (CERA).

“As we enter the new millennium we are also entering a new erafor the energy industry – the gas era,” said Everett Gibbs, ArthurAndersen managing director of Natural Gas Industry Services.”Throughout the 1990s the gas industry established its competitiveposition, now the industry faces a decade of unprecedented growth.This growth, fueled in large part by power generation, will requirea major increase in capital investment in gas supply.”

“The rapid growth in gas demand will be accompanied by two otherimportant forces that will define the industry in the decadeahead,” said Tom Robinson, CERA managing director. “First, thestructure of the industry will be altered by an ongoing wave ofconsolidation – particularly in energy distribution; and second,the revolution in information technology and e-commerce will alterthe way we use energy and ensure reliability.”

The study notes developments in several key supply regions. Inthe Gulf of Mexico, the study points to a major shift in thecomposition of gas supply from the Gulf that has happened over thelast decade. The deep-water Gulf represents a major new supply area- with production having grown from 0.5 Bcf/d in 1990 to more than3.5 Bcf/d by the end of the decade. Yet overall production in theGulf remained essentially flat due to a sharp decline in productionfrom the Continental Shelf.

While growth in the deep-water is likely to continue at an evenfaster rate, slowing or reversing the declines in the Shelf isessential to growing overall U.S. supply. The study also foundseveral new frontiers for supply have begun to emerge. AtlanticCanadian gas as well as major new discoveries in the southern partof the Northwest Territories will play a bigger role in the futuresupply picture. Also, greater use and the reactivation of existingLNG facilities will accelerate over the next five years, the studypartners found.

U.S. LNG imports grew from 77.7 Bcf in 1997 to nearly 85.5 Bcfin 1998, the highest level in the 1990s. Imports under long-termcontracts with Algeria constituted roughly 80% of the LNG importedin 1998 with the remaining spot cargoes arriving from Australia andthe United Arab Emirates, the study found. As of July 1999, thenumber of spot cargoes brought in to the Lake Charles, LA, terminalexceeded those received in all of 1998.

Longer-term, there is renewed interest in Arctic gas – a majorpotential supply source that will help reinforce gas reliability.

Joe Fisher, Houston

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.