Consultants

Consultants at PIRA Energy have news for all those Chicken Littles out there who estimated a gas production decline in 2003 and who are predicting another drop in 2004: production was up last year and it’s going to grow by another 1-2% in 2004.

Consultants at PIRA Energy have news for all those Chicken Littles out there who estimated a gas production decline in 2003 and who are predicting another drop in 2004: production was up last year and it’s going to grow by another 1-2% in 2004.

Ever since Enron crashed and a wave of related negative events came down on the gas industry, there have been concerns about the health and even the fate of the gas spot market. But trying to take the spot market’s pulse isn’t easy. In fact to do it with any accuracy is darn near impossible, according to several market experts.

Ever since Enron crashed and a wave of related negative events came down on the gas industry, there have been concerns about the health and even the fate of the gas spot market. But trying to take the spot market’s pulse isn’t easy. In fact to do it with any accuracy is darn near impossible, according to several market experts.

Consultants at Global Insight predict that 3 Tcf-plus storage levels at the end of November will result in lower-than-expected prices next year, but a number of factors, including limited LNG import capacity, minimal gains in Gulf of Mexico gas production, further declines in gas imports from Canada and a growing economy, will put a floor under the market.

Consultants at Energy Security Analysis Inc. (ESAI) said they expect the U.S. gas market to become the “sink” for any unwanted or spillover global LNG supply in the future, which could mean significant downward pressure on domestic gas prices at certain locations.

Consultants at Energy Security Analysis Inc. said they expect the U.S. gas market to become the “sink” for any unwanted or spillover global LNG supply in the future, which means significant downward gas price pressure and a struggle for domestic gas producers. However, not all market experts agree on that assessment. Benjamin Schlesinger, president of Schlesinger and Associates Inc. in Bethesda, MD, said that such fears are unfounded.

While some analysts and consultants agree that prices are nearing their bottom for the summer and likely will rebound due to an increase in gas demand related to warmer temperatures and the recent price decline, there is disagreement over what will be the “equilibrium” price for the rest of the storage injection season.

Consultants at Cambridge Energy Research Associates (CERA) are convinced that natural gas production in North America is poised to enter a long-term decline and that imports of liquefied natural gas (LNG) will have to make up the supply gap. But Tom Wood, gas production expert at the Energy Information Administration (EIA), isn’t buying it. Wood said the gas resource is still there, but producers simply have chosen to drill overseas in the short-term.