US winter gas supplies to be sufficient, but expensive: officials

Washington (Platts)--9Dec2005

US natural gas supplies this winter will most likely prove adequate to
meet heating demand, but the cost of those supplies will prove painful for
many consumers, speakers said Friday at a press conference sponsored by The
Energy Daily in Washington.

     Energy prices this winter will "rise dramatically over last year's
levels," particularly for natural gas and heating oil, said Howard
Gruenspecht, deputy administrator at the US Energy Information Administration.

     On the positive side for consumers, gas production in the Gulf is
gradually recovering from this summer's hurricane-related damage, and "by
historical standards, natural gas storage is in pretty good shape," the EIA
official said. However, gas prices "in both spot and futures markets remain
very high by historical standards," he noted.

     David Parker, president of the American Gas Assn, said the current gas
price dynamic, including record highs on the NYMEX gas futures contract,
"very much concerns us."

     While AGA is "promoting more efficiency and conservation very vigorously"
to its member utilities, Parker warned that if this winter turns out to be
colder than normal, interruptible gas customers could have difficulty
obtaining gas supplies in February and March.

     "If we have a normal winter, home heating is safe, but it's pricey,"
Parker added.

     As such, Red Cavaney, president of the American Petroleum Institute,
urged Congress to take steps now to prevent those pricing dynamics from
recurring.

     "In this industry, most everything meaningful happens over time and
requires a great deal of planning," he said.

     In particular, Cavaney said that Congress should take steps to open the
Arctic National Wildlife Refuge to gas and oil exploration and drilling,
ideally "before everyone leaves for the holiday period" this year. And in
2006, Cavaney urged legislation to increase access to Outer Continental Shelf
gas supplies "so that we aren't subject to the volatility that we've seen" in
gas prices.

     Gruenspecht said that EIA will release a report Monday outlining its
long-term energy projections through 2030, noting that "there will be
significant changes" from the agency's previous long-term report.

     For more information, take a trial to Platts LNG Daily at
http://www.LNGdaily.platts.com.

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