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Michigan Relying More on Pipeline Imports

As natural gas production in Michigan posts its 14th consecutive year of decline, a Michigan Public Service Commission (PSC) report projects interstate pipeline deliveries to the state will be 664.2 Bcf in 2011, a 14.2% increase.

The state's production is projected to decline by 5.5% to 133.5 Bcf in 2011, according to the PSC's "Summer 2011 Energy Appraisal." Gas sales in the state are projected to be 780.7 Bcf this year, an increase of 2.4% over 2010 sales and 11.3% over 2009 sales, based on an assumption of normal weather. Residential home heating is seen as the driver for consumption growth as the 2010-2011 winter season was 3% colder than normal, the PSC report said.

Despite increased sales, prices should remain relatively flat, the report said. "...[T]he continued growth in estimated and proven natural gas reserves is having a dampening effect on inflationary forces."

The weighted average gas cost for the four largest gas utilities of Michigan is projected to be $8.70/Mcf for April 2011 through March 2012. The weighted average customer charge for these same utilities is $10.60/month. A residential customer's annual bill for the same period is forecasted to be $989 based on April 2011 billed gas cost recovery factors, the report said. If prices remain at current levels, the average annual gas bill is expected to be less than last year's bill.

"...[D]ue to the emergence of shale gas...and the Rockies Express Pipeline, Michigan has become less reliant on natural gas from the Gulf of Mexico and may not experience as large an impact [from hurricane disruptions to supply]," the report said.

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