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FERC head counts on gas market to respond
Gary Park, Petroleum News Calgary correspondent
The U.S. Rocky Mountains, the North Slope, Canada and liquefied natural gas are the vital ingredients in achieving a better balance between natural gas supply and demand, said Federal Energy Regulatory Commission chairman Pat Wood.
Warning the Bush administration to avoid intervening in the marketplace, he told a Deloitte & Touche conference June 19 that market forces will respond in due course, although gas prices will rise this winter and into 2004.
Wood also endorsed exploration in the Arctic National Wildlife Refuge and other untapped regions, arguing “it’s a crime” not to allow expanded drilling for “this wonderful, benign fuel.”
He said the shock of gas prices at $6 per thousand cubic feet should force people to “think based on facts, as opposed to emotion” about the urgency of utilizing U.S. resources in addition to what is imported.
Wood said the tendency to over-react led to federal legislation in the 1970s to discourage the use of gas for power generation.
But that “over-response” by government is not likely to be repeated now, given the supply-demand concerns, he said. Gas prices to remain ‘decoupled’ from crude Meanwhile, Stephen Brown, director of energy economics at the Federal Reserve Bank, told a House panel June 19 that until there is adequate development of gas resources gas prices will likely remain “decoupled” from crude through 2005.
He said the rule of thumb is that the spot gas price at Henry Hub is about $1 per million British thermal units for $10 per barrel of West Texas Intermediate crude, which would point to gas prices of $3 instead of the current $6.
The National Petrochemical and Refiners Association blamed supply concerns and price volatility on the federal policy of restricting supply while promoting the environmental benefits of using gas to generate electricity and fuel industrial plants.
Questar chief executive officer Keith Rattie told the same panel the United States is not running out of places to hunt for gas, it is only running out of places where “we are allowed to look.”
He said opponents of drilling on federal lands are preoccupied with “fantasies about a planet free from the scourge of hydrocarbon fuels.”
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