Tuesday February 14, 2006

Natural gas shortage, USA

al.com :

In the United States, Americans are so dependent on natural gas that they find themselves in the middle of what some experts say is a supply crisis. Natural gas has countless commercial and residential uses, including being burned to produce electricity and heat for 55% of American homes. Industrial production has been hurt by high natural gas prices, with the chemicals industry taking the hardest hit.

Starting in the late 1990s, the power industry embraced natural gas, which burns cleaner than coal, and gas-dependent power plants popped up around the country. Back then, gas cost about $2 per thousand cubic feet - more than three times cheaper than today's prices, said Michael Zenker, managing director for global gas at Cambridge Energy Research Associates. Using natural gas was less expensive than coal or nuclear energy, he said. But unbeknownst to everyone, the 15-year "gas bubble" of high-supply, low-cost gas was about to burst.

In 2000, U.S. and Canadian gas supplies peaked and it caught the country by surprise. For the first time ever, a surge in drilling did not result in more supply. Today, gas drilling is at a record high, but production is relatively flat. That wouldn't be a problem if demand were stagnant, but Americans are big-time energy consumers.

Dwindling natural gas supplies in the United States, which holds 3% of the world's reserves, have made it economically attractive to import gas. To import gas, it must be chilled until it becomes a liquid, then placed on a ship. Once the ship arrives, the gas is heated in a receiving terminal, brought back to its gaseous state and pumped into pipelines. But liquefied natural gas (LNG) has faced opposition from citizens and environmental groups.

(2006-02-14 13:20:02 SGT) [Energy] Permalink

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