U.S. natural gas supply is plentiful

Abundant supply could help hold down prices

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Despite supply interruptions caused by Hurricane Gustav, there should be plenty of natural gas available for heating this winter, and prices are likely to stay about the same as last winter, natural gas producers said Thursday.

Nearly half of the natural gas production in the Gulf of Mexico remains shut down because of two recent hurricanes. But the industry reports that gas inventories at the start of the winter heating season -- traditionally the beginning of November -- are expected to be well above the five-year average.

Locally, consumers should know more about what their natural gas bills will look like this winter when NIPSCO issues its annual winter heating forecast Tuesday, according to the utility. On the same day, the U.S. Energy Information Agency is scheduled to issue a nationwide winter heating forecast covering natural gas, heating oil and propane.

NIPSCO customers received some good news this week when the utility reported natural gas prices will be 9.8 percent lower this month than in September. It is the third month in a row that natural gas prices have dropped after reaching record levels this past summer.

And this winter, producers are expected to pump about 8 percent more gas than last winter, with more wells operating, the Natural Gas Supply Association reported Thursday in its winter outlook report. That should be good news for consumers because abundant supplies can help hold prices down.

The Natural Gas Supply Association expects the slowing economy could temper demand for gas, particularly for industrial uses. But demand from power companies is forecast to increase slightly.

The industry group, which represents gas producers, does not attempt to project retail prices.

But Patrick Kuntz, a vice president for natural gas and crude oil sales at Marathon Oil Co. and the association's current chairman, said various factors suggest wholesale gas prices this winter are likely to be similar to last winter.

"We expect flat price pressure," said Kuntz at a news conference.

Kuntz said that despite the supply disruptions from the Gulf hurricanes, "we expect a healthy level of storage" of natural gas going into this winter as producers drill more wells especially in pursuit of unconventional gas resources.

Production this winter is expected to be 57.5 billion cubic feet a day, or 7.9 percent higher than last winter, the association said, with an expected 3,450 billion cubic feet of gas in storage by November.

"It's the highest level (of production) in 35 years," said Kuntz.

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