The Critical Role for Natural Gas in Evolving Energy World

Suzanne Ogle, CEO of the Southern Gas Association says talk of natural gas going away is not realistic or responsible.

Quite the opposite, it’s “really the critical remaining dispatchable fuel source” available, one that offers the quickest way to reducing global emissions, she said in an interview with NGI [Natural Gas Intelligence].

“If your goal is to eliminate fossil fuels, well, you and I are not aligned,” she added. “If your goal is to create a sustainable long-term clean energy future… We’re running toward the same goalposts. Let’s get there.” …

NGI: Let’s start on markets. Gas production has marched to new highs, just as we march into what so far has been a mild winter. Futures have fallen below $3, and some analysts have warned that storage levels could fill up if producers don’t cut back. How do you see supply and demand in 2024?

Ogle: When we say ‘normal,’ who knows where normal is. All these predictions are really based on a normal winter, but that could change at the drop of the hat because you know, the increasing ocean temperatures create the opportunity for polar vortexes. And when it stays cold, it’s going to stay cold for longer. It’s really all a big puzzle — a near-term, short-term and long-term puzzle.

If you look at maybe the next six months, we just had summer production that had about 4 Bcf/d in growth year/year. So that kind of led to the oversupply. But as winter comes, production is starting to slow down. Producers are cutting the drilling activity, and that is leading to a slowdown in production. I think that 2024 production is going to be down probably because of price and also fiscal discipline. As you know, the producers have been hit on pretty heavily for fiscal discipline.

So you’re starting with higher storage, but storage withdrawals are expected to be more this winter than they were previously. Probably a little bit of that is a gain in the residential commercial sector, maybe a little bit of that is the exports from the increased demand down in Mexico and LNG feed gas.

If you look at an 18-month play out here, the supply and demand can be tighter from that dip in production that’s helping to balance the market so they don’t bust through the storage inventories. But then you’re going to see that growth, maybe right around spring is my expectation.

And then if you look out longer term, there’s really a serious imbalance potential because of the liquefied natural gas buildout. And so you’re going to need producers in the Tier one and Tier two properties to start to help meet that demand. That’s going to require storage to help balance it and it’s going to require more pipeline capacity. So, longer term, I’m definitely bullish on gas.


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