New Supplies of Natural Gas are Vital to Consumers

January 3, 2003

A mismatch between growing demand for natural gas and supplies of it will inevitably result in higher prices for natural gas consumers during the next 10-15 years unless public policies and personal attitudes change about bringing fresh supplies of natural gas to market, according to a report issued recently by the American Gas Association (AGA).

The American Gas Association represents 187 local energy utility companies including Atmos Energy that deliver natural gas to more than 52 million homes, businesses and industries throughout the United States. Natural gas meets one-fourth of the United States’ energy needs and is the fastest growing major energy source.

AGA’s From the Ground Up: America’s Natural Gas Supply Challenge says North America holds abundant supplies of natural gas, but emphasizes that the natural gas industry will have difficulty meeting increasing consumer demand unless policies that restrict exploration and production efforts are updated to reflect current technology, and unless additional gas supplies come from Alaska and overseas.

"Americans want a stable, reliable source of environmentally friendly energy that is produced in North America. They find it in natural gas. But, given the long lead time associated with producing and transporting natural gas, critical decisions must be made now," said AGA President and CEO President David N. Parker. "As a popular television psychologist might say, it is time to "get real" about increasing supplies of natural gas in the face of growing customer demand."

Ironically, Parker said, a host of laws and regulations encourage homes, businesses, industries and electric-power generation plants to use more natural gas because it is the cleanest fossil fuel. Yet outdated concerns regarding the environmental impact of finding and producing natural gas make it increasingly difficult for companies to meet increasing consumer demand, the report found.

Continued migration of natural gas production in the U.S. has occurred in the deepwater Gulf of Mexico, south Texas, north Texas/Louisiana and the Rocky Mountain basins and is vital, the report said. However, areas that are currently off-limits to gas production must also begin to come into play if we are to satisfy growing demand. Similarly, growth in Canadian production is likely in Canada’s offshore and coal bed natural gas resources.

In addition, non-traditional supply sources such as Alaska gas and liquefied natural gas (LNG) will likely account for a significantly larger share of the supply mix, the report found. Alaska’s total natural gas resource base might hold 250 trillion cubic feet of natural gas – enough to support all of the United States’ current natural gas needs by itself for more than a decade, the report said. Yet it may take 8-10 years to site, permit and construct a pipeline to transport natural gas from Alaska to the lower-48 states, the report said.

Since short-term solutions are limited, natural gas customers should be aware that weather and economic forces will continue to make natural gas prices fluctuate during the next few years because the supply/demand balance is so tight, Parker said.

To meet America’s natural gas supply challenge, the American Gas Association recommended that:

•Current restrictions on access to new sources of supply must be re-evaluated in light of technological improvements that have made natural gas exploration and production more environmentally sensitive.

•Renewable forms of energy should play a greater role in meeting U.S. energy needs, but government officials and customers must realize that all forms of energy have some environmental impact.

•Federal and state officials must take the lead in overcoming the pervasive "not in my backyard" attitude toward energy infrastructure development.

•U.S. officials should work closely with Canadian and Mexican officials to address the challenges of supplying North America with competitively priced natural gas in an environmentally sound manner.

The study is posted on the AGA website (www.aga.org). Copies of it are also available free of charge by calling (202) 824-7207.

From the Ground Up: America’s Natural Gas Supply Challenge is based on basic research conducted by the American Gas Foundation for the U.S. Department of Energy. The mission of the American Gas Foundation is to be an independent source of information, research and programs on energy and environmental issues that affect public policy, with a particular emphasis on natural gas.

Atmos Energy Corporation, headquartered in Dallas with a regional office in Greeley, is one of the largest natural gas distributors in the United States, serving about 1.7 million utility customers. Atmos Energy’s utility operations serve more than 1,000 small and medium-size communities in 12 states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. For more information on Atmos Energy, visit www.atmosenergy.com.