There would be progressively greater impacts on natural gas consumption, prices and domestic supply if any or all of three restricted gas supply scenarios studied by the Energy Information Administration (EIA) occurred, the agency said in a special report released last week.

The gas industry would be facing a much greater task meeting demand if the Alaska gas pipeline ended up not being built, And it would be even worse if the industry were only allowed to build three more liquefied natural gas (LNG) import terminals, if unconventional supply resources prove more difficult to extract than expected, or if all three restricted supply scenarios occurred, EIA said in a report prepared for Rep. Barbara Cubin (R-WY), chair of the House Resources subcommittee on Energy and Mineral Resources.

In February Cubin asked the agency to provide an assessment of the three low natural gas supply scenarios. She asked that the EIA’s Annual Energy Outlook 2004 be rerun with three different assumptions, separately and combined.

What EIA found in its “Analysis of Restricted Natural Gas Supply Cases” was that gas prices would be higher, demand would be forced lower and the industry would have to find alternative supply sources, given any or all of the three restricted supply scenarios.

In 2025, consumption would range from 700 Bcf lower than the reference case in the “no Alaska pipeline” scenario to 4.5 Tcf lower if all three scenarios were combined. Electric generator consumption would be most affected, with 3 Tcf less consumption in 2025 in the combined case, EIA said. The share of electricity generated with natural gas in 2025 would be reduced by between one percentage point (no Alaska pipe case) and eight percentage points (combined case).

Lower 48 average wellhead prices would be 20 cents higher in 2002 dollars without the Alaska pipeline or as much as $1.21/Mcf higher if all three scenarios occurred. “It is important to note that these price differences are average annual differences and that seasonal variation or other events causing volatility could result in higher prices,” EIA said in the report.

Because prices would be higher given any one of the restricted supply scenarios, gas supply from other sources would also increase, EIA said. For example, if the Alaska pipeline were not built, LNG supply would rise to fill void. In the low LNG case, Canadian and Mexican imports and Lower 48 production would increase and a pipeline to Alaska might be built sooner. In the low unconventional supply case, imports and conventional supply sources would rise and the Alaska pipeline might be in service as soon as 2013.

For additional details go to https://tonto.eia.doe.gov/whatsnew/newwhatsnew.cfm.

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