This week natural gas was the focus at Ziff Energy Group's North American Natural Gas Strategies conference in Houston, Texas. The meeting confirmed the continuing trend of expanding demand for natural gas and the need to find and develop new sources of supply.
Of Canada, the United States, and Mexico, only Canada has a supply surplus that can be used to fulfill the need for larger year-over-year gas volumes. Doug Whisenant, President of Williams Gas Pipeline, gave a keynote address projecting a 28.5 tcf market by 2010 or about 2% growth per year. This is slightly less than the 30 tcf market projection that has been an industry target for the past few years. Whisenant expects the Northeastern US to have the largest growth at 5.2%, 1.25 bcf/d; followed by the Mid-Atlantic at 3.2%, 2.07 bcf/d; and the Mountain West at 2.8%, 1.46 bcf/d.
Another consistent theme was the use of natural gas for expanding power generation. Hal Kvisle, President and CEO of TransCanada Pipeline, projected that the market could grow to 32.6 tcf per year due to growth in power generation with natural gas continuing to replace coal as the fuel of choice. He said that daily demand in the North American market would grow from the current level of 69.6 bcf/d to 89.2 bcf/d in 2010.
Paul Ziff, CEO of Ziff Energy Group, updated earlier survey numbers from top 30 gas producers. Drilling increased reserves by 106% over last year, but due to negative revisions of 6%, the market managed a total replacement of its reserves. Offshore drilling grew more than 200% over past seven years. In 1995 more than 200 wells/yr were drilled while in 2001 offshore drilling cut more than 650 wells.
Representatives from all three energy ministries made presentations. New supply sources focus on three regions: Eastern Canada (Atlantic Ocean), the Rocky Mountain basins, and the Gulf of Mexico. Over the longer term, new supplies will be needed from Alaska's North Slope, Canada's McKenzie Delta, and the northern arctic islands. Significant investment in pipelines is required to bring those resources into the gas pipeline system.
