The booming digital economy and a thirst for electricitygeneration are driving an ever-expanding demand for natural gas,which in turn is pushing companies to find and produce energy at apace they can barely keep up with, according to Coastal CEO DavidArledge.

Arledge, who spoke to a joint meeting of the Houston Associationof Professional Landmen and the Houston Producers Forum last week,said that in the “battle to fuel electric generation,” natural gashas “won,” based on many factors: lower cost, quicker turnaround inplant construction and customer choice for more efficient, cleanenergy.

“No one can assess the effect of the demand for powergeneration,” said Arledge. Estimates project gas demand for power,including “new economy use,” will more than double to 31 Bcf/d by2010. That would mean that the Gulf of Mexico’s current output of14 Bcf/d would have to be “more than duplicated” in the next 12years.

Everyone, including pipeline companies, midstream companies andU.S. and Canadian producers, will have to increase their efforts tomeet the demand, said the Coastal CEO.

“It has been estimated that the pipeline business will have tospend around $34 billion to maintain, expand and prepare storagefor our customers.” He said companies will have to expand existinglong-line transportation, increase midstream capacity and add morestorage — along with obtaining more regulatory flexibility — tomeet the market’s growing demands.

Looking into his crystal ball, Arledge also predicted that inthe near future, digital companies will have two lines: one atraditional power line connected to a regional power grid, and asecond line to fuel on-site generation of power for power supplydisruptions.

And even though the lines won’t come cheaply, he said thecompanies installing them will do it gladly. “Companies are willingto pay a substantial premium” to increase their reliability.”

Carolyn Davis, Houston

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