Abstract
The U.S. natural gas industry is in a state of evolutionary change as a result of deregulation and competitive market forces. The changes were precipitated by a reduction in demand and an increase in supply in response to a regulated increase in prices. The resulting "bubble" of excess gas deliverability led to the development of spot markets and a sharp drop in spot prices. Government has now acted to deregulate the business, removing price controls and opening access to interstate pipeline transportation. As a consequence, producers today are faced with great challenges and opportunities in the management of gas resources in the evolving environment. Companies which develop a management strategy to capitalize on the new opportunities should have a competitive advantage in the future.
The challenge of gas supply management today is to be innovative to remain competitive. There is great opportunity to enhance profitability from natural gas assets through improved knowledge and procedures, and through proper resource allocation, prioritization, and organization. As traditional boundaries to competition are removed, new opportunities arise for producers to increase profitability.
In these difficult times it is easy for producers to loose sight of the opportunity which results from the current turmoil. Recent events have been devastating: gas prices are severely depressed, and despite seasonal fluctuations, relatively warm weather conditions have yielded relatively slack demand; the eighteen month gas bubble is in its fifth year with no end in sight; higher priced gas contracts are threatened; take-or-pay issues remain; and the regulatory quagmire appears to be getting worse, or at least more confusing.
