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 this week to a joint meeting of the HoustonAssociation of Professional Landmen and the Houston ProducersForum, said that in the “battle to fuel electric generation,”natural gas has “won,” based on many factors: lower cost, quickerturnaround in plant construction and customer choice for moreefficient, clean energy.

“No one can assess the effect of the demand for powergeneration,” said Arledge. He said estimates project gas demand forpower, including “new economy” use,” will more than double to 31Bcf/d by 2010.That would mean that the Gulf of Mexico’s currentoutput of 14 Bcf/d would have to be “more than duplicated” in thenext 12 years.

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. He said that the companies will haveto expand existing long-line transportation, increase midstreamcapacity and add more storage — along with obtaining moreregulatory flexibility — to meet 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,” saidArledge.

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