American Gas - March 2010 - (Page 6)

in the know Industry InsIghts Fueling the Future access to new supply has lowered prices, adding yet another advantage to natural gas use, but will new energy laws stymie growth? Not loNg ago the outlook for the U.S. natural gas industry was one of strong demand growth (driven by gas demand in the electric generation sector), declining domestic supply, a need for significantly more liquefied natural gas (lNg) imports to meet growing demand and a robust price environment. times have changed, really changed. linked environmental policy) been more hotly debated. The nation can achieve the quickest emissions reductions at the lowest possible cost by using more natural gas in the power sector—gas that is indigenous, abundant and clean. in addition, with the right commercial agreements, consumers can lock in affordable prices, and producers can be assured of sufficient revenue to provide continued, costeffective supply. natural gas has to be a growing component of the U.s. supply portfolio, and its future should be very bright. What a Difference a Year Makes in 2009, global energy demand decreased sharply in the face of the global recession. negative effects from the financial crisis also were felt across the energy industry as credit markets contracted and access to investment capital became more costly and constrained. in the United states, consumer spending, housing starts and manufacturing indices were all down sharply while the unemployment rate increased to more than 10 percent. According to the energy information Administration (eiA), 2009 end-use natural gas demand fell by approximately 2 percent (1.3 Bcf/d) relative to 2008, largely driven by losses in the industrial sector. industrial gas demand fell by approximately 8 percent (1.5 Bcf/d) in 2009 relative to 2008. Although the economy appears to have bottomed out with some signals of recovery, it could take several years before industrial gas demand reaches historical 2007–2008 levels again. This past 18 months, the north American natural gas industry has witnessed some remarkable changes: a global financial crisis, a global recession, significantly lower demand, growing U.s. supply, declining canadian supply, growing LnG supply and imports, and bloated storage inventories. The result: the lowest natural gas prices seen in seven years (summer 2009). Looking ahead, what does the U.s. energy future hold, and what role will natural gas play? never has energy policy (and inextricablyMarch 2010 AmericAn GAs a New Paradigm: coal to Gas ‘Switching’ not surprisingly, the U.s. electricity demand also decreased 3–4 percent in 2009 relative to 2008. What may have surprised some is that natural gas demand in the power sector BRIAN E. FRANK is president of BP Energy Co. and president of BP’s North America Gas and Power business, based in Houston.

Table of Contents for the Digital Edition of American Gas - March 2010

American Gas - March 2010
President’s Message
In the Know
Contents
Industry News
Safety First
To Be the Best
It All Computes
From Volatile to Variable
Vendor News
Advertisers' Index
Places to Be
Marketplace
Jobline
Noteworthies
Facts on Gas

American Gas - March 2010