A return to normal temperatures in the first quarter andthroughout next year is likely to lead to a 2.4% increase in gasdemand in 1999, the Independent Petroleum Association of America(IPAA) said in its November Short-Run Forecast. IPAA sees demandreaching 22.3 Tcf, a peak that surpasses the previous high of 22.1set in 1972 and a significant turnaround from the 1.1% decrease to21.7 Tcf of gas demand expected this year.

The association expects residential consumption to lead thecharge in 1999, rising 5.4% to 4.9 Tcf, in sharp contrast to the5.5% decline expected for 1998. Commercial consumption is likely tosee a 5.1% jump to 3.3 Tcf in the same period compared to a 4.3%drop this year.

Interestingly, the IPAA predicts that industrial markets willuse only 1.6% more gas in 1999, moving the total to 8.87 Tcf,despite a large number of proposals for new gas-fired generationprojects. “Most of these new plants,” the report says, “will not befinished in 1999.” Still, the increase does improve upon the 1998result, in which industrial demand fell 0.4%. The big downer nextyear will be gas consumption by electric utilities, which areexpected to see milder summer weather and turn to competing fuelsbecause of the crude oil price slump. Gas consumption by the sectoris expected to decrease 1.4% to 3.12 Tcf in 1999, in contrast to6.6% growth this year.

Also in the report, the IPAA said production in the Gulf ofMexico will reach 19.0 Tcf in 1998, a mark last achieved in 1981.Gas imports are expected to rise 3.6% to 6.4% in 1999, thanks toadditional capacity provided by Northern Border Pipeline andTransCanada. The IPAA also reports storage is nearly full andsupply should meet demand for even the most extreme weatherconditions this winter.

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