Recent weaker market conditions have not changed the underlying tight gas supply/demand balance, energy consultant Kevin Petak of Energy and Environmental Analysis (EEA) said in a presentation to the Natural Gas Council (NGC) on Tuesday. Petak predicts that Henry Hub gas prices will average between $5 and $8/MMBtu for the next few years with longer-term prices in parity with crude oil prices.

“Mother Nature was kind this winter, loosening the gas supply/demand balance going into the injection season,” Petak noted. “However, a hurricane season like last year’s or a normal winter next winter could again create a tenuous market.

“Have recent market events changed EEA’s views? No, recent events have bolstered our views,” Petak said at the NGC’s Customer Summit. “The North American gas supply/demand balance is still tight and expected to stay that way.” He said the demand curve is still “shifting to the right, placing pressure on supply, leading to higher prices.”

Dominion Energy CEO Paul Koonce agreed. “We dodged a supply bullet this winter with warmer than normal temperatures, but the market fundamentals have not changed,” Koonce, who is chairman of the NGC, said in a statement. “Urgency remains, and no one should be lulled into complacency.”

Arlington, VA-based EEA expects to see more domestic gas production this year but less imported gas. Assuming normal weather next winter, consumption could be much higher than it’s been recently, Petak noted. EEA is projecting gas demand of 75.7 Bcf/d next winter compared to 68.3 Bcf/d last winter.

Energy efficiency and conservation are the best means of bringing the gas market into balance in the near term but new supply sources are definitely needed in the long term, according to EEA.

“The North American gas market may be best characterized as a ‘demand leads supply market’ for the foreseeable future,” said Petak. Gas consumption in the power sector will grow substantially with more than 200 GW of new gas-fired power generation being built to meet increasing power demand, he added. “Growth in electricity sales has averaged 2% per year during the past 10 years. We expect that trend to continue.”

EEA sees some growth in coal-fired power generation but it won’t keep pace with power demand growth. Nuclear and renewables also will grow slightly, but existing gas-fired power generation will “meet a substantial part of the incremental growth in electricity demand during the next five years,” Petak said.

As a result, new gas supply will be needed. Contrary to some forecasts, EEA believes there is an abundant North American gas resources base, but tapping into what remains will be costly. Petak predicts that about 500 Tcf can be produced with today’s technologies at prices above $4/MMBtu. At $3/MMBtu, supply becomes “very elastic.”

Production from maturing fields is expected to decline about 1% per year. New frontier supplies are expected to account for 37% and 46% of the total U.S. and Canadian gas supply in 2015 and 2025, respectively versus only 19% today, Petak added. In particular, LNG and Alaska gas will provide about 25% of North America’s total gas supply by 2025. “There would be little growth in supply without these new sources…,” Petak said.

Koonce said a broader advocacy campaign is “essential to forging policies that ensure adequate, affordable and reliable supplies of natural gas.” The NGC is an informal association of senior natural gas industry executives who meet periodically to discuss the opportunities and challenges facing the gas industry.

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