Lower Prices, Consumption, Near-Term Construction Lessens 2010 Spending Levels

By Rita Tubb, Managing Editor | February 2010 Vol. 65 No. 2
VESTAMID PA12 pipe ends are shown being jointed using heat fusion.

The latest figures from the U.S. Energy Information Administration (EIA) indicate that close to 70 million customers rely on the nation’s natural gas distribution network to deliver fuel to their home or business. Natural gas is delivered to customers through a 2.3-million mile underground pipeline system that includes:

  • 2 million miles of local utility distribution pipes (1.2 million miles of utility mains, plus 800,000 miles of utility service lines); and
  • 300,000 miles of transmission lines.

These customers consume 23.2 Tcf of natural gas, accounting for 24 percent of the total energy consumed in the U.S. yearly. More than 1,500 companies carry out the natural gas distribution process and vary in size and type. They include LDCs serving millions of customers, as well as those that serve less than 100. They also include mainline pipeline companies that provide direct service mostly to large volume end users, although the bulk of the natural gas transported by pipeline usually reaches end users via LDCs.

Spending trends
The American Gas Association (AGA) reports that customers can expect lower bills on average this winter compared to last. Plentiful domestic supplies and lower wellhead prices will lower bills and provide relief for natural gas customers struggling in a troubled economy. Supporting this is the EIA’s Short Term Energy and Winter Fuels Outlook released Oct. 6 which indicates energy prices remain volatile, reflecting uncertainty or risk in the market.

Natural gas prices have dropped considerably since last year. However, after falling to as low as $3.82 per MMBTU on Oct. 14, prices have steadily drifted higher into the $5 - $6 range.

The EIA report anticipates consumption to decline by 2 percent in 2009 and 0.2 percent in 2010 as weak economic conditions hamper the industrial sector, where data show consumption is down by 12.4 percent through July compared to last year. With lower consumption in the residential and commercial sectors as well, natural gas use in the electric power sector continues to serve as the only demand outlet for increased supplies.