The Northwest of the United States and Canada embraces some of the most enticing scenery and the best economic opportunities of anywhere in the world, spreading as it does over Oregon, Washington, Idaho and British Columbia.
As if that isn’t enough, it has something else most of North America can envy.
Positioned between two of the continent’s most prolific production areas — the Western Canada Sedimentary Basin and the U.S. Intermountain West — it apparently has little to worry about on the natural gas supply front over the rest of this decade and probably beyond.
By most estimates the two basins have estimated remaining proven reserves of 85 trillion cubic feet and an ultimate resource potential of more than 500 tcf.
Combined annual production from the two regions is forecast to grow by 11 percent over the next four years to almost 27 billion cubic feet per day, 75 percent coming from Colorado, Wyoming and Utah and 25 percent from Canada. Volumes of that order are comfortably ahead of the region’s demand.
Gas association says market in good health
As a result, the market is in “relatively good health,” says the Northwest Gas Association, whose members include six gas utilities and three transmission pipeline systems.
That’s a change from much of North America, where new production capability is struggling to keep pace with growing consumption, the association said.
In its 2006 annual report, which covers market conditions through 2011, the association forecasts that demand will grow by 2.1 percent a year, for a combined 8.1 percent, with the bulk of the increase generated by residential and commercial customers.
The findings contained one significant shift from previous years.
Demand by gas-fired electrical generation facilities, which has driven past projections, has gone into retreat in anticipation of a sharp drop in demand in the face of volatile gas prices.
As well, demand for gas-generated power has dropped in areas with ready access to hydropower and with significant alternative energy developments, especially wind.
“Expected demand growth among residential/commercial consumers is powering overall growth,” the report said. “This partly reflects a growth in the number of consumers — due to an expanding economy and population — as well as the higher cost of alternative energy sources, such as electricity and oil.”
Although the association does not expect gas prices will ever return to lows of prior decades, it said the Pacific Northwest “continues to benefit from lower prices than other regions and gas continues to be a good value relative to other energy options, particularly for heating.”
Industrial demand eroded
On the industrial front, some economic hiccups and the surge in commodity prices over recent years saw demand in that sector erode by one-third during the 1999-2004 period.
While industrial demand is still proportionally larger than other customer groups, the margin is shrinking and demand growth is much slower than the other groups.
But there are some smudges on the horizon, the association said:
• A drilling rig shortfall, short-term personnel shortages and barriers to drilling offshore or on federal lands could hinder a larger degree of development in major production areas.
• Rapidly escalating finding and development costs, land access restrictions and regulatory hurdles will add to competition from imported liquefied natural gas. LNG is currently imported to the U.S. from 12 countries which together have an annual export capacity of 7 tcf, the report said.
• Other regions are increasingly competing for gas from Western Canada and the Intermountain West basins, especially as pipelines currently planned or under construction — including the 1.8 billion cubic feet per day Rockies Express system — are brought into service, linking the region with the U.S. Midwest and Northeast.
