Newspaper article THE JOURNAL RECORD

Paper Forecasts Shortage of Natural Gas into '95

Newspaper article THE JOURNAL RECORD

Paper Forecasts Shortage of Natural Gas into '95

Article excerpt

Last week, an advisory panel to the Oklahoma Corporation Commission on natural gas proration concurred that, even with lower production limits due to the 1992 law, gas production in the state is at full speed. Yet, many agreed a shortage is on the way because of depressed drilling levels in the past few years.

This is a national phenomenon, apparently, but broader outlooks put the supply shortage into next year, not this fall as some Oklahomans predict. That is mostly due to different demand forecasts.

Lawrence A. Crowley, analyst with Rauscher Pierce Refsnes in Houston, said in a recent investment strategy paper that U.S. gas production has been at full capacity for the past nine months, essentially since Hurricane Andrew struck the Gulf of Mexico in August.

"The industry has been flat out through both peak and non-peak periods," Crowley wrote.

"This is the first time in over 10 years that such a condition has existed."

Crowley and other Rauscher Pierce Refsnes analysts predict U.S. natural gas deliverability _ supply _ will still decline 5 percent this year to 19.1 trillion cubic feet from 20.1 trillion in 1992. That is because drilling has waned severely since the price collapse of the mid-1980s.

The shortage scenario comes into play because of rising demand.

Some of the proration panelists in Oklahoma forecast a 3 percent gain in gas demand. Crowley noted that gas demand rose 3 percent last year, but predicted a more modest 2 percent gain for 1993 at 20 trillion cubic feet vs. 19.7 trillion last year.

Even taking into a 7 percent gain in gas imports _ mainly from Canada _ to 1.87 trillion cubic feet for 1993, up from 1.75 trillion in 1992, Crowley projects the surplus gas supply will fall 57 percent this year to 938 billion cubic feet from 2.2 trillion last year.

For 1994, he projects a shortage of 282 billion cubic feet. That is based on projections that domestic supply, or deliverability, will drop another 5.2 percent to 18.1 trillion cubic feet while demand rises 2.3 percent to 20.45 trillion. Imports are forecast to rise, too, nearly 10 percent to 2. …

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