Natural gas: It's headed from surplus to shortage
Reserve additions in the lower 48 states are not keeping up with the current rate of production, and deliverability surplus will soon become deliverability shortfall during periods of extended peak demand. Surplus deliverability will likely fade away, inasmuch as gas well completions are less than half of what they were when additions exceeded the current production rate of 16 tcf/year, and the outlook for a sharp increase in completions is bleak. Demand, lackluster before the recent cold weather, is likely to suffer some loss in markets where lower resid prices can switch loads back to oil. Year-end '87 price spikes were a welcome relief to spot gas sellers, but low reside prices have already put a lid on what industrial users and power plants will pay. As an immature market struggles to develop structure in a quasi-deregulated environment, the Ferc is reduced to tinkering with the minutiae of Order 500, as it seeks to create a compromise that would be equally unsatisfactory to all. Canada is increasing its stake in the game. Canadian producers demonstrated their willingness to accept 1987's low price levels and be players. It will be another problem year for U.S. producers, as price relief for spot gas is more than offset by the Order 500 dilemma and drilling cost increases exceed wellhead price increases. Canadian gas will take a bigger piece of a desultory market. But pending shortfalls promise a better day for those with patience, stamina and deep pockets.
- Research Organization:
- The Gas Price Report, The Gas Price Index, Houston, TX (US)
- OSTI ID:
- 7081817
- Journal Information:
- World Oil; (United States), Vol. 206:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
03 NATURAL GAS
NATURAL GAS
INVENTORIES
MARKET
CANADA
ECONOMICS
ENERGY DEMAND
ENERGY SHORTAGES
ENERGY SURPLUSES
FORECASTING
FUEL SUPPLIES
IMPORTS
NATURAL GAS INDUSTRY
PRODUCTION
USA
DEMAND
ENERGY SOURCES
ENERGY SUPPLIES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
INDUSTRY
NORTH AMERICA
SHORTAGES
294003* - Energy Planning & Policy- Natural Gas
292000 - Energy Planning & Policy- Supply
Demand & Forecasting
030600 - Natural Gas- Economic
Industrial
& Business Aspects