Vinod K. Dar, formerly of Hadson Corp. of Oklahoma City and now
president of the Washington, D.C., consulting firm Dar &
Associates, sees some transformations coming for the natural gas
"In 18 to 24 months, the wellhead price of natural gas will be
much higher and never look back," warned Dar.
"Next year, gas demand will surge and keep going into the
millennium." Gas is a unique commodity in the energy realm, Dar
asserts, and history is bunk. The changes taking place in the gas
industry are far-reaching and nothing can stand in the way, he
adds. It is nothing short of revolution, he indicates.
"It is impossible for an individual firm to completely forecast
what the . . . great transformations will lead to," Dar admitted.
"Some outlines of the new order, however, are beginning to
emerge." Basically, Dar foresees four major transformations taking
place from now through 1998 in the U.S. natural gas business. A
sketch of those changes includes:
From energy socialism where there was government price
controls to a free market system, including production and return
From political guarantees for utility financing and public
capital markets and, more recently, project financing through
contract-based credits and private placement markets, to corporate
financing through enterprise credit and a global capital market.
From government mandated vertical integration and
consolidation to unregulated vertical reintegration and horizontal
And, finally, from a state of relatively low intellectual
capital that is value-added to very high intellectual capital that
At the crux of Dar's observation is the premise of the
metamorphosis of the worldwide economic reform taking place, which
affects all business.
He acknowledges that the dramatic change in the role of capital
in the gas business is not an isolated incident.
"The basic principle of economic activity now _ here and abroad
_ is vigorous capitalism," Dar said.
"What is happening in the gas business is not an isolated
phenomenon but rather a manifestation of endemic global change."
Over the next six years and beyond, the key elements to bring Dar's
predictions to fruition, as he sees it, are based on the following
Natural gas will increasingly become an intermediate fuel and
electricity will gradually, but inexorably, drive other fuels out
of end use markets, including personal transportation. Electricity
is the only final enegy form compatible with our rapidly evolving
information, biotech and molecular engineering economy. It is
universal, versatile, convenient and quiet and clean in its
The pipelines of the new economy will pump voice, text, data
and images and be fueled by electricity, not hydrocarbons.
The real, inflation adjusted price of natural gas at the
wellhead in 2000 may be no higher than in 1990 and could be lower;
the nominal price of gas in 2003 may be lower than the nominal
price in 1983.
Finding and production costs of natural gas will decline
steadily in real terms as the productivity of the exploration and
production sector soars.
This sector will be generally divided into four categories:
pure science driven explorationists; pure natural gas manufacturing
companies that concentrate on low cost extraction; divisions of
fully integrated, non-regulated gas and electric companies, which
are a new breed just now being hatched; and, subsidized U. …