Strategic planning of Gas Research Institute's R&D program requires an appreciation of the outlook for U.S. energy supply and demand and an estimate of the role that natural gas will play within that outlook. The development of a consistent framework that establishes a likely projection of future energy supply and demand is critical to this planning process. This framework is called the GRI Baseline Projection.

Overall, the 1988 GRI Baseline Projection indicates that U.S. gas production can be held stable over the next 25 years as a result of incremental production of gas in the lower-48 using new technologies and production practices and the introduction of Alaskan gas into lower-48 markets. In the 1988 GRI Baseline Projection, detailed sensitivity analyses were made of the effects on this gas supply outlook arising from significant changes in the outlook for oil prices or the demand for gas, such as might be expected should environmental policy decisions encourage gas consumption.

These sensitivity analyses lead to some interesting observations. The linkage between oil and gas prices may not be as strong as past experience has indicated. That is, while gas prices will follow oil prices down, they will not necessarily follow oil prices up. Return to gas demand levels comparable to the peak level of the early 1970s will require a substantial increase in gas imports. New gas supplies must be viewed from three perspectives: cost, location relative to gas demand, and the incremental unit size at which the new sources are introduced into the U.S. gas supply slate.

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