With relatively little economic growth forecast, the outlook for natural gas in the Pacific Northwest may look deceivingly quiet, too, but the 2013 outlook by the Northwest Gas Association (NWGA) offers a few areas of concern.
The regional gas organization, which includes British Columbia (BC), red-flagged some infrastructure, demand and supply issues, albeit none of which causes immediate concern, over the next 10 years.
The two main supply areas — BC and the U.S. Rockies — combined now produce about 25 Bcf/d, and the NWGA outlook sees that rising to 28 Bcf/d by 2022. The increase mostly is to come from BC’s Montney Shale and Horn River Basin, as well as the Niobrara formation in the Rockies.
NWGA outlined three baseline scenarios for gas demand growth, low, expected and high. The expected forecast calls for 1.2% annual growth and 10.3% cumulatively through 2022. Low growth would be around 0.7% annually, while the high forecast is growth of 1.8% a year.
For prices, the NWGA sees them remaining between $4.00-7.00/MMBtu through 2022. “Current prices are now expected to hover around $3.00-4.00/MMBtu until the economy begins a sustained recovery and gas supply/demand become more balanced,” the report noted.
By 2022, peak-day demand could “approach or exceed” the region’s infrastructure capacity, according to the forecast. The “changing nature of the region’s gas demand” has real implications regarding how existing infrastructure is used and the timing and type of expansions that would be made.
The biggest growth area is expected to be in electric generation, but NWGA said it was still too early to quantify how much. Two coal-fired plants — Boardman and Centralia — are slated to be shut down. The utility operators have pledged to replace them at least partially with gas-fired generation units.
There are also question marks around new or expanded industrial loads and the use of natural gas in vehicle transportation. “Some NWGA members are also reporting increased inquiries for natural for process fuel or feedstock to Northwest industrial facilities,” the report noted.
NWGA acknowledged that it is not always easy to reflect what is happening in real-time in a 10-year forecast. For example, the demand data don’t really reflect that “natural gas in the region is changing.” NWGA members have their eyes focused on a number of demand drivers, the report said.
Increased industrial loads, which are still unspecified and driven by gas prices also could lift the forecast. These would be driven by, for example, petrochemical production.
NWGA also emphasized that a growing unique aspect of gas is its versatility. The outlook sees gas benefiting aerospace, steel, glass, wood and paper products industries, along with food processing, fabrication and high technology.
“This is where natural gas truly shines — as a homegrown, low-cost, clean-burning resource with a myriad of uses,” the NWGA said. For the Pacific Northwest, stakeholders have a “newly plentiful” resource in which to turn.
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