US natural gas: enough for all?

Will there be enough natural gas for the United States? In frigid Massachusetts, a critical short-fall in gas forced Gov. Edward J. King to call a statewide energy emergency.He has asked homeowners using gas for heating to lower their thermostats to 63 degrees F. Other officials have called for home thermostat settings as low as 55 degrees and as low as 40 degrees for businesses and industry.

But nationwide, the crisis could burst a "bubble" of confidence for the industry. Industry consultant John Sharff of Arthur D. Little Inc., suggests that natural gas suppliers may be attracting more customers than they can reliably provide with fuel.

Two Bay State gas utilities, which supply more than half the commonwealth, failed to have enough fuel on hand for the frosty assault that has hit the East Coast this month.

Demand has been running 10 percent above the worst case year expected by the companies. "This is our coldest January since 1875," said a Boston Gas spokesman. Other utilities so far have not reported pending shortfalls, despite record-breaking demand.

To relieve the Massachusetts shortage, an emergency shipment of liquefied natural gas (LNG) is on the way from Savannah, Ga. But Boston Gas will have to cut off industrial customers if demand is not reduced before the shipment's expected arrival on or about Jan. 22. The crisis developed when an LNG tanker from Algeria was delayed by a Mediterranean storm.

This extra-high demand for gas is severely testing an industry that is undergoing dramatic rises in prices, increases in customers, and battles to contract supplies from abroad and from new synthetic fuel plants. The possibility of immediate price decontrol when Ronald Reagan becomes president could bring further changes.

Until this winter, the gas industry had regained some of the credibility it lost when gas shortages during the winter of 1976-77 closed factories in the Midwest, mainly in Ohio. Convincing customers of adequate supplies has not been easy, but the numbers show progress, according to the American Gas Association (AGA).

Two million new hookups have been added since 1978, while partial price decontrol has provided incentive for new gas production. Wary of cutoffs again, industries have not been as eager as homeowners to switch to gas. Last year, residential conversions from oil heat to gas in the US were 384,000 up from 365, 000 in 1979 and 144,000 in 1978.

Rapid promotion by utilities of the claimed advantages of natural gas over oil was to coincide with increased production. And in 1979, the latest year for which data are available, the industry added 14.3 trillion cubic feet (tcf) to reserves, a 12-year high and a 35 percent increase over 1978.

But consumption increased even faster in 1979, a pattern that may repeat itself when the figures are complied for 1980. And, with record low temperatures being recorded along the Eastern seaboard, consumption might leap even higher for 1981. The shortfall between additions to reserves and consumption in 1979 was about 5 tcf., reports the AGA.

"There is some game playing going on out there," Mr. Sharff says. "It may prove a little dangerous."

The danger may lie, he points out, in the US gas industry attracting many new customers -- mainly residential -- which have high peak demands. At the same time the industry may not be able to get all the supplies expected from Canada, Mexico, Alaska, planned synthetic gas plants, and several liquid natural gas sources abroad -- all of which now have major blocks of some sort, political or technological.

By 1990, the AGA expects conventional gas production in the lower 48 states to level off at 15 to 17 tcf., slightly less than 1980. New sources would and anywhere from 3.2 to 9.22 tcf. -- perhaps not enough to meet demand, warns Mr. Sharff, if they were to come on line.

AGA spokesman, however, say the industry is confident of gaining the new supp lies.