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Natural gas supply to meet winter demand

There will be enough supplies of U.S. natural gas to meet this winter’s demand even with the disruption in offshore gas production caused by the recent hurricanes, but costs will be much higher, the American Gas Association said Tuesday.
Home Heating Oil Prices Skyrocket
“We are confident natural gas supplies will be adequate to meet firm demand this winter,” Paul Wilkinson, American Gas Association vice president for policy analysis said Tuesday.Tim Boyle / Getty Images
/ Source: Reuters

There will be enough supplies of U.S. natural gas to meet this winter’s demand even with the disruption in offshore gas production caused by the recent hurricanes, but costs will be much higher, the American Gas Association said Tuesday.

“We are confident natural gas supplies will be adequate to meet firm demand this winter,” Paul Wilkinson, AGA vice president for policy analysis, told reporters at a briefing on the winter outlook for natural gas.

Still, the lingering effects of hurricanes Rita and Katrina will disrupt some offshore natural gas production this winter, which will help push costs for consumers “significantly higher,” he said.

AGA’s member utilities predict average natural gas bills for their customers will be 30-40 percent higher this winter compared with last year, much lower than the federal government’s estimate of a 50-70 percent increase, the trade group said.

Wilkinson said the government’s higher cost forecast focuses on the price of natural gas at the wellhead where the gas is drilled and does not take into account the hedging programs utilities have taken to lock in lower gas prices for some of their supplies.

Nonetheless, Roger Cooper, AGA’s executive vice president for policy and planning, said: “I would look for gas bills going up 50 percent this winter.”

Helping to ensure there will be plenty of winter supply is the amount of natural gas stored underground, which Wilkinson said is “on track” to reach 3.2 trillion cubic feet by Nov. 15 at the beginning of the winter heating season.

Stored gas totaled just more than 2.9 trillion cubic feet at the start of October, according to the Energy Department.

However, between 1 billion and 3 billion cubic feet per day of natural gas production in the Gulf of Mexico could still be offline during the upcoming January-March period due to lingering damage from the hurricanes, Wilkinson said.

He said the amount of production shut-in this winter will depend on how quickly closed natural gas processing plants can restart and the level of damage to underwater pipelines that bring the gas onshore.

The trade group is urging Congress to provide more money for the federal Low Income Home Energy Assistance Program (LIHEAP) to help poor people pay their expensive utility bills this winter.

Natural gas is the most popular heating fuel in America, with 52 percent of all U.S. households using gas.

Of the remainder, 31 percent heat with electricity, 9 percent use heating oil, 6 percent use propane and 2 percent use wood, kerosene or other fuels, the AGA said.