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

Dominion seeks rate freeze against opposition on many fronts

Virginia's biggest electric utility wants to weaken state oversight of its rates, saying the move will help protect its customers from possible steep increases in their electric bills brought on by federal efforts to curb carbon emissions.

Dominion plans large-scaled solar project in Va.

Dominion Virginia Power says it's filed an application with state regulators to build the state's first large-scale solar project.

Follow Power Engineering on Twitter
Latest News

Wylfa nuclear power plant to restart in a week

The Wylfa nuclear power plant in the UK is expected to restart soon after being shut down sin...
Coal Ash

Power Engineering Photo of the Day

03/25 Henry Hub Average Natural Gas Spot Prices

03/25 Henry Hub Average Natural Gas Spot Prices

The Henry Hub is the pricing point for natural gas futures contracts traded on the New York M...

Westinghouse asked to take 49% share of Bulgaria nuclear power plant

Bulgaria has asked Westinghouse Electric Co. to take up a 49 percent stake in the country’s n...

Dominion Va. Power proposes $1 bn, natural gas-fired power plant

Dominion Virginia Power (NYSE: D) said the company is proposing to build a $1 billion, 1,600-...

Weekly Coal Production Report

The Weekly Coal Production Report has been updated for the week ended March 21, 2015.

Westinghouse, German companies to offer nuclear decommissioning services

Westinghouse Electric Co. signed an agreement with HOCHTIEF team to offer integrated decommis...

ENEC files for nuclear power plant operating licenses

The Emirates Nuclear Energy Corp. (ENEC) filed the operating license application for two nucl...

Power Engineering Current Issue

01/01/2015
Volume 119, Issue 1
1501pe-cover-lg
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 | 2014 | 2015

Power Industry Wire News

Canadian Overseas Petroleum Reports 2014 Year End Results

Canadian Overseas Petroleum Reports 2014 Year End Results

ISO Board Appoints New Member to EIM Transitional Committee

ISO Board Appoints New Member to EIM Transitional Committee

Technology Pioneer Brings Lifelong Passion for Innovation to BuildingDNA as New CTO

Technology Pioneer Brings Lifelong Passion for Innovation to BuildingDNA as New CTO

EVTN Announces Voraxial Order for Produced Water Treatment

EVTN Announces Voraxial Order for Produced Water Treatment

WindStream Technologies Launches Pilot of Its SolarMill(R) Technology for India's Ministry of Railways

WindStream Technologies Launches Pilot of Its SolarMill(R) Technology for India's Minis...

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 >>