The American Gas Association released a study last week thatforecasts gas consumption growth of 40% by 2015, fueled by strongindustrial demand growth, the dominance of gas-fired generation innew power plant construction and the popularity of gas in new homeand commercial construction.

AGA projects gas will expand its share of the U.S. energy marketto 28% in 2015. Consumption is expected to rise to 31.9 quadrillionBtus (roughly 31 Tcf) from about 22.9 quads in 1997.

According to The 1998 AGA-TERA (Total Resources Analysis) BaseCase, electric utilities are expected to double their gasconsumption over the period to 6.9 quads, while industrialconsumption is projected to grow 22% to 12.8 quads. Residentialconsumption is forecast to grow 25% to 6.4 quads, and commercialdemand is expected to jump 27% to 4.1 quads.

AGA expects production to climb to 26 Tcf from 19 Tcf over theforecast period, continuing to account for about 96% of totalsupply. Imports from Canada are forecast to grow to only 4 Tcf by2015 from 2.96 Tcf in 1997.

“Prices will increase very modestly in real dollars by 2015,with increased inter-fuel competition and energy industryrestructuring putting downward pressure on all energy prices overthe long run,” said AGA Chief Economist David Shin. AGA expects gasprices to be about $2.24/MMBtu (constant value 1997 dollars) in2015 up slightly from $2.17 in 1997, $2.09 in 2000, $2.11 in 2005and $2.15 in 2010. In nominal dollars, i.e., including inflation,wellhead prices are projected to reach $3.86/MMBtu by 2015.

AGA shows utility-delivered residential gas prices fallinggradually to $5.75/MMBtu in 2015 from $6.67 in 1997.

Rocco Canonica

©Copyright 1998 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.