Gas Shortage May Loom, Warns Matt Simmons in World Energy Magazine

Business Wire, Dec 6, 2002

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Dec. 6, 2002

With U.S. natural gas production rates in decline, strong winter demand could trigger a shortage that spikes gas prices and creates a crisis, warns Matthew Simmons in the new issue of World Energy magazine.

The well-known energy investment banker and researcher who heads Simmons & Company International builds his case on information developed when he headed the National Petroleum Council's Demand Task Force, plus subsequent research of Texas Railroad Commission figures by Simmons & Company.

Since Texas' drilling boom ended in 2001, Simmons says, "There is no way Texas gas supply can grow," and that some observers "now worry that gas supplies might fall by 5 to 7 percent by the end of 2002."

Also discussing energy supplies, Harry Longwell, director and executive vice president of Exxon Mobil Corporation, writes that another 80 million barrels of oil equivalent/day must be found to meet global demand by 2010.

"The cost of doing so could reach $1 trillion, or about $100 million a year," he writes, substantially more than the industry is spending today. Longwell says technological advances and improved cost efficiencies will supply the answer.

BP's Lord Browne of Madingley discusses his company's approach to meeting the energy needs of America, which will increase to 55 million barrels of oil equivalent per day within 10 years.

Increasingly, says Browne, the answer lies in the deep water of the Gulf of Mexico, where production has already surpassed Alaska to become the number one source for the U.S.

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