Newspaper article THE JOURNAL RECORD

Canadian Claims Demand for Gas to Rise by 1995

Newspaper article THE JOURNAL RECORD

Canadian Claims Demand for Gas to Rise by 1995

Article excerpt

A natural gas supply shortage will hit North America by 1995, predicted Richard B. Hilliary, acting executive director of the Independent Petroleum Association of Canada, Wednesday at the Governor's Energy Conference here.

"Supply is tight," he said. "The surpluses, the gas bubbles of the 1980s will be gone with the demise of the decade."

"In fact, the scramble for new supplies will be on, and in more earnest than producers have ever seen before.

"The potential market will be bigger than all of us can supply."

By 1995, Hilliary forecasts U.S. demand for natural gas at 22 trillion cubic feet - 22.2 percent above the 1988 level of 18 trillion cubic feet and equal to the all-time peak in 1972 just prior the Arab Oil Embargo.

"Reserve replacement has not kept pace with production," Hilliary said.

U.S. drilling activity has waned through the latter 1980s but production is still surpassing reserves replacement, he said. His organization forecasts U.S. reserve replacement to hold firm at its 1988 level of about 7.5 trillion cubic feet - about 3 trillion cubic feet of which Hilliary suggested was due to the addition of coal gas and deep water Mobile Bay probable reserves.

Oklahoma produced 2 trillion cubic feet of natural gas in 1988 and represented one of the four largest reserve additions.

"This shift from surplus to shortage will have several important ramifications for all sectors of the natural gas industry," Hilliary said.

Those include:

- Probability of regional curtailments this winter if there is prolonged cold snaps.

- A dramatic shift in gas purchasing strategies from spot to long-term.

- Impact of price, most assuredly on the upward swing.

Canada's production in 1988 was at 3.8 trillion cubic feet and drilling is at a 12-year low, comparable to lax activity in the U.S., Hilliary said. Similarly, Canadian producers have not been replacing production with new reserve additions in recent years, he said.

However, he said the neighboring country expects it can deliver an estimated 1-1.5 trillion cubic feet more than current levels. …

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