PERSPECTIVES ON ENERGY AND PERSPECTIVES ON ENERGY AND NATURAL GAS

On a worldwide basis, the U. S. consumes almost one-bird of all energy produced and almost two-thirds of all natural gas consumed. During the past two decades, while our population has increased by 1.7 percent per year, our consumption of energy has percent per year, our consumption of energy has increased by 2.8 percent per year. This steady growth in energy consumption has been accompanied by some significant changes in the energy mix. Coal has ceased to be the dominant energy source, being displaced by oil and natural gas. Presently, oil supplies some 40 percent of our energy requirements, natural gas between 30 and 35 percent and coal between 20 and 25 percent. percent and coal between 20 and 25 percent. Natural gas in the U.S. has long been an important and competitive energy source and chemical feedstock, and there is a widespread and well developed gas market, including all associated facilities. The Future Requirements Committee (operating under the auspices of the U. of Denver) of the U. S. Gas Industry Committee predicts that gas consumption will increase about 6 percent annually for the next several years, with present consumption almost doubling by 1990. I am sure that the participants at the commence we well aware of the widely reported problems of natural gas supply, and many of us here are already affected by these problems and involved in trying to overcome them. Most experts agree that this shortage exists only in proved reserves. The Potential Supply (committee operating under the Potential Supply (committee operating under the direction of the Colorado School of Mines) of the U. S. Gas Industry Committee estimates the total natural gas potentially recoverable in the "Lower 48" and Alaska to be nearly 1,300 Tcf (of which two-thirds is in the "Lower 48") or four times as much as presents proved reserves. The problem, then, is to stimulate exploration to turn these potential reserves into proved reserves by increasing potential reserves into proved reserves by increasing the economic incentives for those involved in the business. Because of the time lag between exploration, development and transmission of gas from a producing field (now estimated as being from 5 to 10 years), there will still be a supply gap for a number of years. Various forecasts indicate this gap to be on the order of 3 to 7 Bscf/D by the latter part of this decade, which may be as much as 6 part of this decade, which may be as much as 6 percent of national consumption. percent of national consumption. The specific areas that can conveniently use substantial LNG imports to help overcome their supply problems in the 1970's are the Atlantic Seaboard and Southern California. With regard to the Atlantic Seaboard, possible LNG imports of 1.6 Bscf/D by 1975 and 4.2 Bscf/D by 1980 have been estimated. This represents 11.5 percent of the area requirements in 1975 and 26 percent in 1980. With regard to Southern California, LNG is likely to be imported into the San Diego-Los Angeles zone, since indications are that Alaskan and Canadian gas, moved by pipeline, can economically supply requirements only as far south as San Francisco. It is possible that 1 Bscf/D of LNG will be imported by 1980. This would represent 20 percent of that area's requirements.

As to prices, it is inevitable that costs of getting indigenous natural gas to market will rise. To encourage further exploration and production, I believe that there should be and will be a rise in wellhead prices. Also, the inflation of the past few years and that still ahead of us will cause the cost of long-distance pipeline systems to rise faster than the possible savings of economies of scale. In an age of growing environmental concern, it is beginning to be realized that natural gas is a premium fuel that should require a premium price. premium fuel that should require a premium price. So I believe that LNG can be imported into the Atlantic Seaboard at acceptable prices, albeit higher than most current domestic prices. However, the huge investments required to undertake major LNG import programs require that the LNG be delivered to baseload purposes under long-term contact commitments, if acceptable prices are to be realized.

CURRENT FACILITIES, PROJECTS AND PLANS PROJECTS AND PLANS

A number of LNG production and transport schemes are now either in operation, or under planning (n design preparatory to operation over the planning (n design preparatory to operation over the next 2 to 4 years (see Table 1)

Two import terminals (in Boston and New York) are being put into operation for the unloading and storage of "spot" cargoes of LNG.

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