Natural gas for winter heating should be plentiful

By: By H. JOSEF HEBERT Associated Press Writer
By: By H. JOSEF HEBERT Associated Press Writer
Availability of natural gas expected to be high despite production delays in the Gulf of Mexico.

Eric Myer of Eshenaurs Fuels delivers heating fuel to a home on Thursday, Nov. 8, 2007 in Harrisburg, Pa. Oil prices resumed their rise Thursday, indicating that traders were back in a buying mood after pocketing gains from crude's recent rally. Heating oil futures were up by 1.6 cents to $2.6338 a gallon while gasoline prices climbed by 1.7 cents to $2.4578 a gallon. (AP Photo/Carolyn Kaster)

Friday, October 3, 2008

WASHINGTON (AP) -- Despite supply interruptions caused by Hurricane Gustav, there should be plenty of natural gas available for heating this winter and prices are likely to stay about the same as last winter, natural gas producers said Thursday.

Nearly half of the natural gas production in the Gulf of Mexico remains shut down because of two recent hurricanes. But the industry said that gas inventories at the start of the winter heating season -- traditionally the beginning of November -- are expected to be well above the five-year average.

And this winter producers are expected to pump about 8 percent more gas than last winter, with more wells operating, said the Natural Gas Supply Association on Thursday in its winter outlook report.

The group expects the slowing economy could temper demand for gas, particularly for industrial uses, although demand from power companies is forecast to increase slightly.

The industry group, which represents gas producers, does not attempt to project retail prices.

But Patrick Kuntz, a vice president for natural gas and crude oil sales at Marathon Oil Co., and the association's current chairman, said various factors suggest wholesale gas prices this winter are likely to be similar to last winter.

"We expect flat price pressure," said Kuntz at a news conference.

Kuntz said that despite the supply disruptions from the Gulf hurricanes, "we expect a healthy level of storage" of natural gas going into this winter as producers drill more wells especially in pursuit of unconventional gas Production this winter is expected to be 57.5 billion cubic feet a day, or 7.9 percent higher than last winter, the association said, with an expected 3,450 billion cubic feet of gas in storage by November.

"It's the highest level (of production) in 35 years," said Kuntz.

The group cited an analysis showing demand this winter may be 2.4 percent greater than last winter. But Kuntz said that increase may be wiped out by further economic downturn, which could cut back on usage by slowing down business operations, resulting in less driving and other factors. Kuntz said the natural gas industry, where investments are long-term, is not expected to be affected in the short term by the turmoil in the credit markets.

The industry association makes no attempt to gauge retail prices

Wholesale natural gas prices at the Henry Hub terminal have fallen to $7.65 per thousand cubic feet range, comparable to prices in the early part of last winter, from an average monthly high in June of $12.69, according to data cited by the gas association.

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