In the current mix of global economic doldrums, low wholesale natural gas prices and dampened demand, Sempra Energy CEO Don Felsinger sees just the right alchemy that can turn into higher prices and demand. Those were some of the asides Felsinger offered to financial analysts last Thursday during a Sempra-hosted meeting in New York City.

“We spend a lot of time thinking about where will gas move from and how will it get to markets, and where are the pipelines today that are disadvantaged that in the future would be advantaged by new sources of gas that will come into play at some point in time in North America,” said the top executive at Sempra, which is heavily involved in Rockies Express and other interstate pipelines, storage and three liquefied natural (LNG) projects in operation, construction and development.

“This is not a good time to be in the natural gas drilling business in North America. We have seen a tremendous dip in the rig count, and that is why when we look at how prices have changed, it is not going to be a gradual bottom and then a slow turn again.”

The turnaround will be more like a sharp bounce, he thinks. There is so much being done right now to shutdown drilling in the U.S. that as soon as the world economy changes pent-up demand will drive up prices rather quickly. Felsinger said he thinks price volatility will continue to be a factor and when prices begin to rebound, too. “The current low natural gas prices are nothing but a precursor for higher prices in the future,” he said.

The current electric generation fuel mix that California is working toward, lowering coal’s portion and greatly raising renewable and natural gas-fired supplies, will eventually become a model for the rest of the nation, Felsinger said. That also will have an influence on future gas supplies and prices, he indicated.

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