Increasing demand to shift to forefront of gas story: ConocoPhillips analyst

Chicago (Platts)--11 Sep 2013 1209 pm EDT/1609 GMT

The big story in natural gas will shift over the next five years from one of abundant supply to one of increasing demand, ConocoPhillips' senior analyst said Wednesday.

"No matter what your view [on price], odds are, consumption of natural gas is going to go up," Jim Duncan, the company's chief analyst and commodity market strategist, told the LDC Gas Forum Midcontinent in Chicago.

In his presentation, Duncan predicted gas demand could rise by 7-20 Bcf/d through 2017, driven by power generation regulations, LNG exports, ethylene plants and transportation growth.

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Deeming the ample supplies of domestic natural gas a "silver lining," Duncan said a number of industrial users -- such as steelmakers and automobile manufacturers -- are seeking to move increasingly to the US. And these users, he said, are looking to site their facilities along existing pipeline corridors.

"You are advantaged in the industrial process if you come to the United States," he said.

Adding to the demand picture, Duncan said, are emissions regulations -- specifically, the Mercury and Air Toxics Standards -- poised to come into effect next year, potentially reducing the number of coal-fired plants and increasing the amount of gas-fired generation.

Another key feature to watch in 2014 is whether the housing market recovers and pushes power load growth toward more normal levels, he said.

Infrastructure buildout will be another major story to emerge the next few years, Duncan said, pointing to the Utica Shale as one area in need of additional infrastructure to move supplies from the region.

Duncan noted that supply is no longer an issue as it was back in 2000, as conventional wisdom now suggests the US has more than a 100-year supply of gas in its own backyard.

"The absolute largest challenge" facing the gas industry is "having to get up in front of people and find something new to say" about the supply picture, Duncan joked.

--Jessica Marron,
--Edited by Richard Rubin,

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