Production decline could cause tight natural gas market for summer

Boston, MA, June 10, 2002 — Preliminary Energy Information Administration (EIA) statistics indicate that domestic dry gas production in 2002 has declined 5% in the first 4 months of 2002 compared to the same period a year ago.

ESAI, in the latest North American Natural Gas Stockwatch, predicts that this downward trend will continue through the summer and early fall months, setting the stage for a tight summer market.

“With the exception of the Pacific Northwest, most of the western half of the U.S., the Great Lakes region, and the Northeast are projected to have above normal temperatures in June and July,” commented Mary Menino, Senior Analyst at ESAI.

“These warmer-than-normal regions are also ones in which gas-fired power generation is especially important.”

Added to this gas consumption of the power sector will be increased gas demand associated with the reviving industrial sector. “Taken together, expected increases in industrial and power generation gas consumption are expected to present a very challenging summer for the gas industry,” Menino said.

At the same time as demand threatens to surge, domestic gas production is falling compared to last year.

ESAI analysis shows that production is expected to decline year on year nearly 4% in 2002.

While Canadian exports will offset some of this decline, ESAI believes only in 2004 will U.S. production be likely to reach 2001 levels.

About ESAI
Since its inception in 1984, Energy Security Analysis (ESAI) has been dedicated to monitoring, analyzing, and synthesizing information about worldwide energy markets. For more information, visit http://www.esai.com.

About EIA
The Energy Information Administration (EIA), created by Congress in 1977, is a statistical agency of the U.S. Department of Energy. It provides policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment. For more information, visit http://www.eia.doe.gov.

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