Oil analysts and economists say demand for the vast natural gas supplies beneath the Rocky Mountain region could grow dramatically if a war in the Middle East disrupts the flow of oil.
Gas drilling and pipeline construction are likely to accelerate in Colorado, Wyoming, Utah and New Mexico once oil supplies are threatened or cut off, officials said.Natural gas has long been viewed as a cheaper, cleaner-burning alternative to oil, especially for use in power generation plants. But bringing natural gas to market requires expensive pipelines and other equipment, and the 176 trillion cubic feet of gas that lies beneath the Rockies has so far gone largely untapped for that reason.
"If supplies are cut off and we see much higher oil prices, we'll get a compelling economic argument to go along with the environmental arguments," said Paul Nelson, of Julander Platt Nelson, a Denver energy investment firm.
The Rocky Mountain region holds about 12.6 percent of the country's natural gas reserves. A giant pocket near the Piceance Basin in western Colorado holds about 85 trillion feet of gas.
"What it comes down to is gas offers the shortest lead time, is the least capital-intensive and is the cleanest fuel," said Tom Petrie, president of Petrie Parkman Inc., a Denver investment firm that tracks the energy industry. "There's a lack of competitive alternatives."
Natural gas also is cheaper than oil, and often is priced at 70 percent the cost of oil.
William Johnson, president of Jofree Corp., a Houston energy consulting firm, predicts gas prices will rise as demand increases. He forecasts price increases of 5 percent to 6 percent annually through the 1990s, or about 1 percent to 2 percent above the inflation rate.