Natural gas is at a crossroads leading to increased markets in electric generation and transportation that are driven by climate change mitigation efforts to reduce our societal carbon footprint, according to the marketing executive for El Paso Corp.’s western pipelines unit, Thomas Powers, who delivered a luncheon address at the “LDC Forum: Rockies and the West” Tuesday in Los Angeles.

Powers and a half-dozen other speakers in the opening sessions of the annual conference reiterated in one way or another that shale gas was the great “game changer” that was redefining how the gas industry approaches its future. “The real story is in the fact that the majority of new production is coming from unconventional sources,” Powers said.

As was the case in the decade just completed, demand will stay mostly flat, but the gas industry will be changed dramatically nevertheless on the supply side, Powers said. Flashing back just a few years, the U.S. and North American natural gas production basins were in decline, so some 20 Bcf/d of liquefied natural gas (LNG) receiving capacity was built, but today on average only about 2 Bcf/d is being used, he said.

“In my 30 years of experience in the industry, this is the ‘game changer.’ In my opinion it is the very significant game changer. While demand has remained basically flat across the United States, we have seen a very significant amount of infrastructure construction in the past two years, and what is driving this is not market growth; it is all about connecting the new shale supplies to the market.”

Another offshoot of the shale revolution, he thinks, is the lack of variation in wholesale natural gas prices across the nation today; basically there are no significant basis spreads and that is a sign of oversupply. This goes hand in hand with domestic resource estimates shooting up 58% in the past four years, Powers said.

For the Rockies, though, Powers is bullish, noting that he thinks the new Ruby Pipeline his company is building to begin next year and the added Kern River capacity both will be filled up by 2015 or 2016, meaning more capacity from the Rockies heading west will be needed at that time.

Where is all this shale-inspired supply going to go? Power generation and transportation, including backing out a large portion of today’s coal-fired electric market, said Powers, but he cautioned that the gas industry will have to “sharpen its pencils” in some cases and in others it will have to overcome a formidable competitor in the coal industry, which is deeply embedded in U.S. power generation.

“If you put a carbon tax on coal, the economics would tend to favor natural gas,” he said. “Coal has one of the most effective and fine-tuned lobbying machines in the country. Coal advocates have lobbied very effectively for many years.”

The abundance of gas resources now give it quite an edge, Powers said. “We’re not in the exploration business, we’re in the manufacturing business.”

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