Traditional natural gas supplies will not keep pace with demand in the long term, and more U.S. companies likely will turn to the global liquefied natural gas (LNG) market in the years to come, a Northeast utility executive said in Houston Tuesday.

Speaking at Ziff Energy Group’s North American Gas Strategies Conference, Wally Parker Jr., president of KeySpan Energy Corp., told attendees that bringing gas from Alaska and opening restricted frontiers in the Rocky Mountains, offshore the East and West Coasts and in the deepwater Gulf of Mexico would help, but it would not be enough.

“We as a nation need to recognize the need to develop our resources,” he said. “Before the frontiers, etc., come to market, though, LNG will play a strategic, key role.” Parker said bringing “world” LNG into U.S. markets would be good for the economy and would improve the supply imbalance facing utilities.

KeySpan, whose market includes Long Island, New York City and parts of New England, is the largest power distributor in the Northeast. Already, said Parker, KeySpan uses LNG to supply 3-4% of New York state’s winter supply and 10% of the Northeast market’s winter supply. On peak days, LNG use jumps as high as 18% in New York and 45% in New England, he added. “Supply is key,” said Parker, and “market growth is central” to the company’s success.

KeySpan’s concern for securing future gas supplies was key in its purchase of Duke Energy’s Algonquin LNG facility last year, he said (see Daily GPI, Dec. 16, 2002). The Providence, RI-based terminal has a 600,000-bbl storage and receiving facility and is fully contracted under long-term arrangements with three Northeast gas distributors, including KeySpan, which already was contracted for half of the capacity.

Eventually, said Parker, LNG will supply about 20% of the U.S. marketplace because of gas exploration and production restrictions here. However, with the “proper policy decisions,” he said there is “an adequate gas supply ready to be developed.”

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