A 30 Tcf market is “widely anticipated and economicallypossible” by 2010, but it will not be achieved easily as allsegments of the natural gas industry will face considerablefinancial and infrastructure challenges to help supply and servethat demand, said a study issued by the INGAA Foundation Inc. onMonday.

The cost of expanding the transmission system in the UnitedStates between 1998 and 2010 to meet the projected gas demand willbe an estimated $30-$32 billion, which is about $2.3-$2.5 billionannually, according to the study that was prepared byArlington,VA-based Energy and Environmental Analysis Inc.

Half of the transmission-related expenditures will go to buildnew interregional transmission capacity, 26% to replace existingpipeline and compressor facilities, 15% for new demand-areaconnections and 9% for new production area links, the report noted.It estimates about 2,000-2,100 miles of new transmission pipelinewill be needed each year between 1998 and 2010.

Likewise, the costs to expand gas storage during that sameperiod are projected to total $2.2-2.4 billion, or about $180-$190million each year, according to the study, “Pipeline and StorageInfrastructure Requirements for a 30 Tcf Gas Market.” It said thiswas in line with actual average storage costs of $200 million peryear over the last 15 years.

Most of the additional storage space will be needed in theNortheast to meet the high growth in gas consumption expectedthere. The highest percentage growth in the power generation andindustrial sectors – two markets that will underpin a 30 Tcf market- is anticipated in the Northeast and South Atlantic regions, theINGAA Foundation study said.

It predicts that the supply sector will have to grow domesticproduction from 19.7 Tcf in 1997 to more than 26.2 Tcf in 2010,which is an increase of 2.2-2.3% annually. “This will require anincrease in annual gas well completions from 11,600 in 1996 to18,000 in 2010, leading to an increase in annual nominal-dollarinvestment in non-associated gas drilling from $12.8 billion in1996 to $26 billion by 2010,” the study said.

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