Preface

On April 25, 2001, the Secretary of Energy, Spencer Abraham, asked the Energy Information Administration to conduct two studies of the North American natural gas market, in view of public concern about the “tight supplies, volatile prices, and regional price disparities” that were experienced during the winter of 2000-2001. The first study, U.S. Natural Gas Markets: Recent Trends and Prospects for the Future, examined causes of the high prices during the winter of 2000-2001. It was released in May 2001. The study concluded that the high natural gas prices were caused by higher than normal demand, low natural gas prices in the preceding years that resulted in a scarcity of wellhead gas productive capacity relative to demand, and a low level of working gas in storage at the beginning of the 2000-2001 winter.

This study updates the first analysis, using more recent data on the U.S. natural gas market, and provides a more detailed examination of future market prospects. Secretary Abraham requested that four topics be considered in this study: (1) the impact of drilling on wellhead natural gas supply, (2) the potential for future imports of liquefied natural gas (LNG), (3) the impacts of removing limitations on access to Federal lands and offshore areas, and (4) an analysis of data improvements that would support a better understanding of natural gas markets. The questions addressed in the analysis are “What is the natural gas supply response to high natural gas prices?” “How do Federal access limitations constrain future supplies?” and “What role could LNG imports play in providing future gas supplies?”

This analysis was prepared by staff from the Office of Integrated Analysis and Forecasting and the Office of Oil and Gas in the Energy Information Administration (EIA). General questions about the report may be directed to Mary J. Hutzler (mhutzler@eia.doe.gov, 202/ 586-2222), Director, Office of Integrated Analysis and Forecasting; James Kendell (james.kendell@eia.doe.gov, 202/586-9646), Director, Oil and Gas Division, Office of Integrated Analysis and Forecasting; Elizabeth Campbell (elizabeth.campbell@eia. doe.gov, 202/586-5590), Director, Natural Gas Division, Office of Oil and Gas; or Andy Kydes (akydes@eia.doe. gov, 202/586-2222), Senior Technical Adviser, Office of Integrated Analysis and Forecasting.

Specific questions about the analysis should be directed to the following EIA staff: