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Natural gas industry struggles to keep promises

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Posted: Mar 10, 2014 8:58 PM

Updated: Mar 10, 2014 8:58 PM

HOUSTON (AP) America's plan to use more natural gas to run power plants, make chemicals, drive vehicles and heat homes may not go as smoothly as expected.

There's plenty of natural gas in the ground, everyone seems to agree. But the harsh weather this winter shows there are obstacles to producing it, and more pipelines have to be built.

The bitter temperatures boosted demand for natural gas to heat homes and businesses. But wells in some places literally froze, making it difficult for some drillers to keep gas flowing. And the high demand clogged pipelines, so even when there was enough production, the gas couldn't get where it needed to go.

Shortages cropped up, and prices in some places soared to record levels. Californians and Texans were asked to reduce their power consumption because utilities were running low on gas to run power plants. Montana State University in Billings had to cancel classes for a day because of a natural gas shortage.

The problems came as a shock because the natural gas market was thought to have escaped from the volatility of the past drillers have discovered enormous amounts of natural gas, production is at record levels and prices had been relatively steady.

Based on that promise of ample supplies and stable prices, the nation has geared up to use more and more natural gas. Utilities are abandoning coal and nuclear power for gas, chemical companies that use natural gas as a feedstock have re-opened old plants and are planning new ones, export facilities are being built, and trucks and locomotives are even beginning to switch to natural gas.

Citi natural gas analyst Anthony Yuen predicts demand will "mushroom" staring next year and grow 33 percent by 2020 from last year's 73 billion cubic feet a day.

But now there is concern about whether the natural gas industry can produce all of the gas their old and new customers need, and deliver it to them through a pipeline system that hasn't been able to keep up with the new demand.

Topics: Natural Gas-Promises

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