Natural gas supplies will be adequate in most parts of the country this winter, but cold weather could trigger spot shortages and a jump in prices, said the American Gas Association.
In a report released Friday, the association concluded that this winter's gas deliverability - the amount available from foreign and domestic wells, and
from storage - would exceed the record for monthly gas demand set in January 1979.At that time, the United States was using more gas year-round than it is right now, so it is unlikely that cold weather and strong demand this winter will drive consumption up that high.
Although overall supplies will be adequate, the association warned that there is good reason to expect a replay of last winter, when a January cold snap drove up gas prices all over the country and forced California utilities to cut off some customers.
Earlier this week, pipelines and gas users said that prices already had risen above what they were at this time last year, and that more price increases were expected.
Lurking behind the association report is the uncertainty that has been generated by the dwindling oversupply of gas deliverability. This gas bubble is expected to disappear sometime next year, and gas market experts are not really sure what will happen when it does.
After declining for most of the 1980s, natural gas demand is rising - quickly. In 1987, demand was 16.7 trillion cubic feet and it is expected to reach about 18 tcf in 1988, the largest one-year increase on record, according to the association.
At the same time, production capacity is declining, the ultimate effect of the sharp drop in oil and gas exploration that followed the crude oil price crash of 1986.
The gas association estimates that at current drilling rates, U.S production capability is declining by 400 billion cubic feet a year. While imports of Canadian gas are expected to increase from about 1 trillion cubic feet this year, the most optimistic projections are that they will not reach 2 tcf until 2000.
The association report refrains from much long-term prognostication, but it does contain a section on the future of the spot gas market, which supplies more than half of U.S. consumption.
The section concludes that in the future, there will be sharper differences between summer and winter spot prices.