North America’s unquenchable thirst for natural gas could grow to 89 Bcf/d by 2015 (from about 59.4 Bcf/d last year), necessitating a push to expand existing liquefied natural gas (LNG) facilities and begin development of two northern natural gas pipelines, energy executives said in Houston Wednesday.

“North American natural gas sources are increasingly difficult and challenging,” Kvisle said. “There is more drilling, but it is less productive.” Current production growth has been “virtually ground to a halt in Western Canada,” he noted, and the “challenge is how we offset declines.” Forebodingly, he warned that most of the wells currently producing in western Canada will be a “minor factor by 2015.”

TransCanada estimates a Mackenzie Delta pipe would supply 1-2 Bcf/d through Alberta into the Lower 48. An Alaskan line could add another 4-5 Bcf/d. The Canadian pipe operator has been lobbying for two separate pipelines into Alberta.

“The projects in northern Canada and Alaska are quite doable in the next 10 years,” Kvisle said, and he stressed that for North America, there is no other viable alternative. “The existing supply basins are in a flat-line situation.”

The United States gas imports currently are almost entirely from Canada, said Kvisle, which has kept the continent basically in one market. However, North America’s gas situation is mirroring that of crude oil in the 1970s, said the CEO. Before Middle Eastern oil-related problems escalated, he reminded the audience that oil sold for about $2/bbl in the mid-1970s. “Will natural gas follow?” he asked.

The Gulf of Mexico, which TransCanada believes will remain one of the four key regions for North American natural gas supply, currently delivers between 27-28 Bcf/d, said Kvisle. By 2015, delivery is estimated to reach 32 Bcf/d. “It’s a sobering thought, but the amount remains the same. Almost flat.”

Western Canada, the second key region cited by Kvisle, had the most “dramatic” increase in production, but its production level now is nearly flat. By 2015, production from this region is not expected to rise above its current delivery rate of 17-18 Bcf/d. Showing significant promise are the U.S. Rocky Mountains, Kvisle said. However, its potential is hampered by land access problems that cloud how much production it actually could deliver. Still a wildcard production-wise are the combined production from the Mackenzie Delta and Alaska.

Outside of far North supplies, LNG also holds the key to North America’s gas future, said executives. Kvisle estimates that North American LNG deliveries will reach 5-10 Bcf/d by 2015, estimates echoed by other energy leaders at the CERA conference.

“For LNG, there is no shortage worldwide,” said Kvisle. “It is a natural part of the equation.”

To prepare for the coming natural gas shortages, industry needs to spend about $150 billion on infrastructure by 2015 , said Mike Warren, CEO of Energen Corp. And most of that amount should be directed to utilities and local distribution companies, the Alabama-based executive said.

Because Energen operates both as a single-state gas utility as well as an independent producer, Warren touted his company’s broad perspective in understanding North America’s natural gas needs. Warren also chaired the American Gas Association last year.

To meet the coming gas demand, Warren said there has to be increased access from domestic supply areas, specifically offshore the East and West coasts, offshore western Florida, the Rockies and Alaska.

“We must become much more global in nature,” Warren said. “After 2010, that means a pipeline supply from Alaska…that means LNG. Natural gas has to originate in Alaska to meet our demand in the next 20 years. As the U.S. demand grows, sources of supply must expand.”That also means natural gas originating in Alaska.”

Price-wise, Warren noted that the $2/Mcf do not provide the incentive for producers to take risks for gas. However, gas prices in the range of $3.50-$4 are high enough, while avoiding the problems of fuel switching by industry and high consumer bills. “As a producer, $3.50-$4 should supply projects. And from a utility standpoint, that’s still acceptable.”

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