Natural Gas Utilities Industry Trends

Gas Producer Consolidation

In response to the large investments required to find and produce oil and natural gas, the big, vertically-integrated producers have become larger, mainly through acquisitions and mergers. Within the transmission segment of the industry, 14 corporations control 85 percent of the pipeline market. Local gas distribution companies are also combining under the umbrella of Public Utility Holding Companies (PUHC), which often includes the operation of electric-generating facilities using natural gas.

LNG

The processes of liquefying, transporting, storing, and re-vaporizing LNG has always made it a more expensive alternative to standard natural gas transported via pipelines. LNG is thought to supply less than 2 to 3 percent of total natural gas consumption in the US, and most observers say doubling that would be impressive. Few predict that overall domestic demand could rise to as high as 8 or 10 percent.

Alaskan Natural Gas

Alaska is one of the largest gas-producing states (from oil wells), but because of a lack of economical transportation to the lower 48, most of the gas is re-injected into oil fields. Various transportation options include a trans-Canada pipeline and liquefaction for ship transport, and a natural gas pipeline that would run parallel to the Alaska highway. Canadian authorities, who could veto the projects, are unhappy about large proposed federal subsidies that would effectively hurt Canadian gas producers, and environmentalists oppose further development of Alaskan wilderness for natural gas production.