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U.S. ENERGY INFORMATION ADMINISTRATION A Dynamic Natural Gas Market is Poised To Exceed Previous Record
Consumption Levels And Could Grow Another 50% By 2020 The recent mild weather in the United States is expected to only temporarily slow the growing demand for natural gas, which has increased 14 percent since 1990 and is expected in 1999 to exceed the record level of 22.1 Trillion cubic feet last seen in 1972. By 2020 consumption is expected to increase by 50 percent over 1998 levels, fueled largely by use in electricity generation. Use of natural gas by electric utilities has grown by 17 percent since 1990 and by 9 percent since 1994. Natural gas has become the fuel of choice for most new and planned electric generating units (Figure 1) as new gas fired generating technologies offer lower initial costs, higher efficiencies, and less adverse environmental effects compared to generation from other fossil fuels. The increase in demand for natural gas over the last decade has brought about substantial change in the natural gas industry. New producing areas are being developed, investment in new pipeline transportation capacity has increased, and new technology and a growing competitiveness within the industry has brought with it more efficiency according to an overview of current trends released today by the Energy Information Administration. While growth in gas demand is expected to continue, there are some signs that the rate of increase may slow in the short term. The drop in the world oil market over the last several years has begun to affect the amount of gas produced in association with oil production, and the drop in oil exploration and development owing to the soft market could influence the growth in future natural gas production. Despite these short-term trends, additional natural gas reserves and supplies are being developed in the deep-waters of the Gulf of Mexico, in the coal beds of the Powder River Basin, and in other areas of the Rocky Mountains region. Natural gas pipeline service capacity is expanding and new routes are being developed to bring this new production to market. In 1999 and 2000, as many as 70 major pipeline projects could be completed, adding 20 billion cubic feet per day of new capacity to the national natural gas pipeline network at a cost of more than $10 billion. As much as 3.7 billion cubic feet per day of that capacity would extend from Canada to the United States. Other highlights of the overview include: * The fastest growing contributor to U.S. natural gas supply has been imports from Canada. Between 1994 and 1998, Canadian imports increased by 18 percent, or 463 billion cubic feet while domestic production increased only 1 percent. Nevertheless, expanding development in the Gulf of Mexico and greater onshore development of major natural gas fields should keep domestic production competitive with imports over the near term. * In the long term, development of technology to enable commercial recovery of the methane in natural gas hydrate deposits would provide a significant new source of natural gas. Recovery of only 1 percent of the hydrate resource would more than double the domestic gas resource base. * The mild weather seen over the past few years in several regions of the nation has already put a damper on some plans for expansion of underground natural gas storage capacity. The bright spot for storage expansion has been the anticipated development of several major new pipeline systems in the Northeast that need tie-ins to storage facilities for operational purposes and to serve their shipper customers. Some of this development could stall if these new systems fail to materialize because of competitive or regulatory forces. * The progress by States on retail competition is moving at a relatively slow pace. As of the end of 1998, only five States had passed legislation (Figure 2) that gives customers the right to choose their gas suppliers, only two more States than at the end of 1996. Another 13 States and the District of Columbia have instituted pilot programs. However, only 4 percent of eligible customers in these 18 States and the District of Columbia are participating in these programs. This analysis is contained Chapter 1, "Overview", the most recently released portion of an upcoming report, Natural Gas 1998: Issues and Trends, which is accessible electronically from EIA's World Wide Web Site at: http://www.eia.doe.gov/oil_gas/natural_gas/analysis_publications/natural_gas_1998_issues_and_trends/it98.html Printed copies of the full report will be available in May from the U.S. Government Printing Office, 202/512-1800 or through EIA's National Energy Information Center, 202/586-8800.
EIA Program Contact: James Tobin, 202/586-4835 EIA-99-13 Contact:
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