Williams executive calls for stable, lower gas prices


By Ann de Rouffignac
OGJ Online

HOUSTON, Apr. 2, 2001—William Hobbs, president Williams Energy Marketing & Trade, a Williams unit, said the natural gas industry will lose market share—unless prices stabilize soon.

"If $5 to $10/MMcf gas prices continue over a period of time, natural gas will decline in use," Hobbs said at the Ziff Energy Group North American Gas Strategies Conference in Houston. "The ammonia, steel, and chemical industries can't survive on $5 gas. They are hurting."

By stabilization, Hobbs said prices should be $2.50-$3.00/MMcf and less volatile. The fabled 30 tcf market is price sensitive, he said. Unless the infrastructure, including increased reserves, is expanded quickly and decisively, the industry is risking another backlash against natural gas similar to what happened in the late 70s.

"We could even end up going back to a 21 tcf market," he said.

Power companies that are driving the march to the 30 tcf market are learning the hard way they can't assume the gas will be available at reasonable prices. Increased drilling, more reserves, and new technology that can help find more gas in existing or depleted areas is key, he said. Stabilization of prices and supply will be achieved once the infrastructure is expanded, including pipelines and storage, Hobbs suggested.

"We plan to expand our own exploration and production activities to cover a growing short position in natural gas," he said.

Hobbs blamed California's gas and power problems on inadequate infrastructure. "We need to move more rapidly to solve this," he said. Hobbs said there are 16,000/bcfd of announced pipeline expansions but only 7,000/bcfd of projects pending at the Federal Energy Regulatory Commission.

He predicted Williams' Kern River pipeline expansion into California, Independence Market Link pipeline projects in the Northeast, and Gulfstream project to Florida will be built.

In Hobbs's estimation LNG will supply one piece of the stabilization puzzle. Imports are projected to increase to 600 bcf in 2005 from less than 200 bcf in 2000. While it's an important piece of the US supply picture, it only it is a small piece, he said. He estimated LNG will serve only 2% of the overall gas-fired power generation market and will be used as a peaking fuel.

Hobbs predicted the convergence of gas and power companies will accelerate as power companies conclude the gas may not be there when they need it. As gas becomes a critical commodity for the 125,000 MW of new gas-fired generation expected to be built in the next several years, power companies will seek "gas company expertise," he said.

Hobbs cited as examples the joint ventures between AES Corp. and Williams and the mergers of Dominion Resources Inc. and Consolidated Natural Gas Co., TXU Corp. and Enserch Corp., Duke Energy Corp. and PanEnergy Corp., and PP&L Resources Inc. and Penn Fuel Gas Inc. The benefits from convergence include access to deregulated market experience, economies of scale/cost reductions, smoother earnings stream, and increased profits, he said.

Contact Annd@OGJonline.com

.

Sponsored by FLSmidth

Related Articles

Mergers, EPA carbon plan generated much attention during 2014

Mergers, the Environmental Protection Agency (EPA) Clean Power Plan, cheap natural gas and the polar vortex were among the most noteworthy generation stories of 2014.

Nuclear Power International’s Top Stories of 2014

Follow Power Engineering on Twitter
Latest News

Constellation to construct 5.1 MW solar project for Community College of Baltimore County

Constellation, a subsidiary of Exelon Corp. (NYSE: EXC), announced the start of construction ...

More people near coal ash pits told not to drink their water

North Carolina officials are warning more residents living near Duke Energy's coal ash pits t...

Duke seeks delay in suit over North Carolina coal ash spill

A Delaware judge is considering Duke Energy's request for a six-month halt of a shareholder l...

Kansas Senate advances bill on state response to EPA rule

A bill approved by the Kansas Senate would require legislators to sign off on the state's pla...

Tax credit for Nebraska wind energy stalled by filibuster

A bill designed to attract more wind farms to Nebraska has stalled in the Legislature.

Day & Zimmermann names Gale as VP of nuclear ops

Day & Zimmermann named Darren Gale as vice president of Nuclear Operations.

Egypt’s first nuclear power plant to break ground in 2016

Construction on Egypt’s first nuclear power plant is scheduled to start in mid-2016.

Dominion CEO: More power plants will be needed in Virginia

Dominion (NYSE:D) is developing a lot of new generating capacity, especially natural gas...

Power Engineering Current Issue

12/01/2014
Volume 118, Issue 12
1412pe-cover1
Products Showcase
Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Power Industry Wire News

Venstar's New Surveyor LCP500 Load Control Panel Controls up to 10 Lighting Zones and Supports Daylight Harvesting for Significant Reductions in Energy Costs

Venstar's New Surveyor LCP500 Load Control Panel Controls up to 10 Lighting Zones and S...

XsunX Identifies Vast Growth Potential in Community Solar Market

XsunX Identifies Vast Growth Potential in Community Solar Market

Miller Energy Defers Cash Dividends on Its Series C and Series D Preferred Stock

Miller Energy Defers Cash Dividends on Its Series C and Series D Preferred Stock

TRC Announces Strong Third-Quarter Fiscal 2015 Financial Results

TRC Announces Strong Third-Quarter Fiscal 2015 Financial Results

Etrion Releases First Quarter 2015 Results

Etrion Releases First Quarter 2015 Results

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>