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The Gas-fired Future: Boom or Bust?

Last year brought prices not seen for decades. So consumers will buy less gas, just as before, and send the forecasts out the window.
Fortnightly Magazine - April 1 2001

were very low in the spring of 1996 and managers of storage operations were not able to purchase and inject enough natural gas to build storage levels back up to planned levels by November 1996. Consequently, natural gas prices were very high in the early heating season of 1996/1997.

11 For a summary of the details see Inside FERC's Gas Market Report, Feb. 2, 2001.

12 Recent data show cost of production such as lifting cost moving upwards even in parts of the business where cost has been on the decline. Costs in the U.S. offshore, primarily the Gulf of Mexico, the largest producing region behind the state of Texas, increased by 8.1 percent for the period 1997-1999 compared to 1995-1997. These costs in the latest period were back to levels not observed since 1988.

13 For an excellent summary of data on changes in pipe capacity over the last several years the reader is referred to "Status of Natural Gas Pipeline System Capacity Entering the 2000-2001 Heating Season," Natural Gas Monthly, Energy Information Administration, October 2000.

14 The Gas Technology Institute in a recent report estimated the resource base in one basin, the Burgos Basin, to be 75 Tcf. See, "Investigation of Undiscovered Gas Resources in North Mexico," 2001.

15 , Dec. 20, 2000 "Plaintiffs take broad aim in California lawsuit."

16 One recent interesting expansion into California was the Transwestern Pipeline Gallop compression expansion, which is estimated to have cost only 12 million dollars, but to have increased capacity by 136 MMcf/day. It was approved on Jan. 22, 2000 and completed by May 2000.

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