Natural gas drying up

Natural gas once was touted as the abundant, affordable energy source of the future.

Now there are escalating worries about a massive shortfall of the commodity, and that could lead to higher prices for the fuel that is used to heat most Utah homes and run some of the state's power plants.

Sounding the alarm is Andrew Weissman, founder and chairman of Energy Ventures Group LLC, based in Washington, D.C.

Weissman, a graduate of Harvard Law School who has focused his 26-year career on the energy industry, said natural gas-fired power plants are driving volatility, putting tremendous pressure on electricity prices.

Today natural gas is the fuel used for about 19 percent of U.S. electric power generation.

According to the U.S. Energy Information Administration, natural gas prices have more than doubled since the late 1990s, when prices averaged $2 to $3 per thousand cubic feet. In the past three years prices have ranged between $4 and $6 per thousand cubic feet.

"I don't think those are short-term events," Weissman told a group of journalists last month at an energy seminar sponsored by the Knight Center for Specialized Journalism at the University of Maryland. "They're early warning signs of what is to come."

In fact, Weissman said the pending natural gas shortage will present the biggest challenge facing energy providers and the U.S. economy for most of the next decade.

As evidence, Weissman points to a September 2003 study by the National Petroleum Council, which concluded that North America is fast approaching a time in which it will no longer be self-reliant in meeting its natural gas needs.

"I think we are heading towards an enormous problem," Weissman said. "More often than not in the next decade we will have severe shortages."

The current emergency, Weissman contends, developed from two converging events.

In 1987, amendments to the federal Powerplant and Industrial Fuel Use Act removed restrictions on the use of natural gas in power generation. But as the federal government was setting the stage for a deregulated natural gas market, most major gas fields in the United States and Canada were rapidly aging.

According to the petroleum council report, natural gas demand grew by more than 40 percent between 1986 and 1997.