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Natural gas industry experts came in with a better prediction than the industry pessimists, but still somewhat short of optimistic, at the second annual Energy Finance Conference.
One panel member forecast a "flat" gas production outlook for US and Canada over the next decade, while another contended that the US in particular is heading toward a critical point in the next 5-10 years with regard its supply-demand balance.
Also, the effects of gas supply and demand on near and midterm gas prices in the US were a hot topic among panel members. Several noted that, given the ongoing constraints placed on US gas supplies, it is likely gas prices will sustain their current strong levels and will remain highly volatile over the next few years.
The panelists each ticked off reasons for the tightness in gas supply, especially in the US. These included the lack of significant gas discoveries, the steady increase of electric power demand, and the lagging development efforts for LNG gas import capacity.
While high gas prices will drive some consumers to other sources (just as obscuring has helped keep industry demand down), the rapid increase in gas fired electric power plants--billed as the cheap and clean alternative to coal and oil--will keep overall demand up. One panelist predicted that the natural gas shortfall will be "massive" by 2010 with "profound implications" for the US economy.
Alaskan gas, a huge source that has not yet been tapped because of the lack of a pipeline to the lower 48 states, will eventually alleviate the shortfall, but that is not predicted to happen until 2013 and "that date is now slipping." The troubled energy bill before congress contains money for a natural gas pipeline, and it enjoys bipartisan support, but the bill as a whole has so much opposition that it may not pass.
Natural gas shortages could have an impact on the much predicted hydrogen economy as one of the most convenient sources of hydrogen to power fuel cells would be natural gas.
The looming constraints on both natural gas and oil production only further underscore the need for an immediate crash program to boost renewable energy sources. The transition to a green economy will either be planned or forced.
Planned would be better.