SOURCE: Global Energy Decisions

July 21, 2005 13:18 ET

North American Natural Gas Prices to Remain High

Report Shows High Prices Won't Moderate Until 2008-2009

Executive Summary Available via Download at www.globalenergy.com

BOULDER, CO -- (MARKET WIRE) -- July 21, 2005 -- Global Energy Decisions, Inc. (Global Energy), a leading provider of software, consulting and data solutions to the energy industry, today announced the release of its Natural Gas Reference Case, a comprehensive and fundamentals-based forecast of supply and demand fundamentals, annual and monthly market clearing prices, infrastructure and market uncertainty. Annual and monthly market clearing prices through 2029 are forecast for 36 gas market pricing centers and hubs.

"The convergence of high gas production replacement costs, persistently high crude prices, and the petroleum industry's preference for oil development over gas development has created persistently higher gas prices," explained Gary L. Hunt, president, Global Energy Advisors, a Global Energy business unit. "Our analysis indicates that gas prices will remain high until significant new North American supply materializes or LNG imports become material to meeting demand. Steps being taken right now will result in greater supply and price moderation beginning in the 2008-2009 period."

The Natural Gas Reference Case forecast utilizes a fundamentals-based supply and demand analysis that maximizes the economic rents available in the market and models "real world" business strategies. Two alternative scenarios -- Global Cartel Pricing and LNG Displacement -- and stochastic volatility analysis were utilized to help quantify market prices. The key findings in the Global Energy Natural Gas Reference Case are:

1.  Natural Gas prices will remain stubbornly high for the next few years.
2.  Industrial demand destruction is a profound outcome of higher gas
    prices across the regions.
3.  Natural gas demand in the future will be driven by gas requirements
    for power generation.
4.  North American gas production is slowing and industry is in
    preservation mode not exploration mode.
5.  Major oil & gas players are moving overseas. This opens opportunities
    for smaller players near term to spur smaller scale E&P activities
    in the US.
6.  LNG will become increasingly important to meet supply needs and US
    dependence on LNG imports is expected to rise.
7.  These changes in fundamentals shift the North American gas market to
    a GLOBAL gas market with all the volatility and potential for cartel
    behavior now seen in the oil markets.
8.  How many LNG re-gas facilities will be built is more a factor of the
    liquefaction capacity at the other end. More than 40 proposals are
    pending but the US needs only a fraction of that. Expect 4-6 re-gas
    terminals with Gulf Coast the most likely home for many of them.
"If, when, and how much LNG will be brought into North America remains a critical question to the future of North American natural gas prices," said George Given, Vice President of Global Energy's Market Advisory Services. "In the next 15 years our increasing reliance on LNG will transform the continental gas market into a global gas market, a new reality that cannot be underestimated for its influence on market prices, industry financial performance and investment."

The Natural Gas Reference Case is available as an advisory service or on a stand-alone basis. An executive summary is available at http://www.globalenergy.com.

Global Energy continues to round out its expanding advisory services offerings by adding this additional gas fundamentals forecast to its market leading power market forecast services. Beyond just the Gas Reference Case, Global Energy has partnered with Altos MarketPoint to develop the Global Energy MarketBuilder software solution for gas modeling combining the Altos NARG model with Global Energy s modeling enhancements, data, and reference case and consulting expertise. This Global Energy MarketBuilder Gas modeling solution will also be integrated into the EnerPrise software offering to work on the same common data model framework providing a seamless integration with Global Energy's other software products. The Global Energy MarketBuilder Gas Modeling solution is available from both Global Energy and Altos MarketPoint.

About Global Energy: Global Energy provides energy organizations with solutions based on a common framework of software applications, energy markets data, and advisory services to enable energy professionals to forecast electricity pricing and demand, conduct resource planning, perform strategic studies and competitor analysis, manage risk, trade energy and schedule delivery, and optimize generation performance. Based in Boulder, Colo., Global Energy has over 400 customer relationships worldwide with the industry's leading market participants including utilities, investment banks, credit rating agencies, government agencies and portfolio managers. More information about Global Energy is available at www.globalenergy.com.

Contact Information

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