Demand, Maintenance To Keep Gas Distribution Market Stable In ’09

Annual Survey and Report
By Rita Tubb, Managing Editor | February 2009 Vol. 64 No.2

The United States saw an increase in total natural gas consumption in 2007, the first since 2004. According to the Energy Information Administration, consumption increased by 6.2 percent in 2007 to 23 Tcf, compared with 21.7 Tcf in 2006. The EIA’s Short Tern Energy and Winter Fuel Outlook, (released Oct. 7, 2008), noted significant increases in all end use sectors except the industrial sector, where consumption increased by a modest 2.1 percent. Residential natural gas consumption rose significantly in 2007, reaching 4.7 Tcf and increasing for the first time since 2003, while the electric power and commercial sectors consumed 9.9 and 6.2 percent respectively, more than in 2006.

While increased consumption, plus an exceptionally large 9 percent increase in natural gas production between first quarter 2007 and first quarter 2008 are positive indicators, the U.S. Commerce Department reported that nationwide housing starts declined 6.3 percent in September to a seasonal rate of 817,000 units, the slowest building pace since early 1991.

For this reason, Underground Construction’s latest survey figures indicate gas utility spending to serve new customers and rehabilitate, repair and replace the nation’s mains and services, meters, valves, regulator, cathodic protection, SCADA networks and peak shaving facility will total about $12.1 billion in 2009, compared to $11.9 billion in 2008.

Looking longer term, the outlook for significant amounts of new gas mains and services should be strong, given the increasing demand for natural gas.

All of this comes at a time when LDCs have seen a 15 percent decrease in the overall level of natural gas deliveries since 2000 and some of their larger volume customers switching to mainline pipeline systems.

Nevertheless, the LDC remains the backbone of the natural gas distribution network. In 2006, the EIA reported that each day, 70 million customers in the U.S. depend upon the nation’s natural gas distribution network, including natural gas distribution companies and pipelines, to deliver natural gas to their home or place of business. The customers currently consume approximately 20 Tcf of gas per annum, accounting for 22 percent of the total energy consumed in the U.S. each year. This end use customer base is 92 percent residential units, 7 percent commercial businesses, and 2 percent large industrial electric power generation users. However, the large volume users, though small in number, account for more than 60 percent of the gas used by end users.

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