Natural gas leader seeks demand increase

Marty Durbin, CEO of America’s Natural Gas Alliance (ANGA), says it is time to accelerate natural gas usage and dependency in the U.S.

“What we’re really trying to get ANGA’s focus is on the demand side of the equation here,” said Durbin who was in Little Rock Wednesday (Oct.9) to speak to the Arkansas Independent Producers and Royalty Owners (AIPRO) and to visit with state business and political leaders.

“I think the opportunity we have here in the country with natural gas, and as an industry, is we have moved past the question of whether we’re going to be producing natural gas,” he said. “No question there are critics out there that would like to see restrictions, but we’re past that. I think across the political and ideological spectrum everyone understands this is a benefit – economically, environmentally, from an energy security and natural security standpoint.”

Durbin sees the biggest potential for natural gas usage to grow in the energy production field. As coal comes under fire in electricity generation, he said that natural gas can offer a cleaner energy alternative.

“There’s almost no comparison. From a volume standpoint, power generation is where the big volumes are. So the more we can move our electricity generation to natural gas, which is happening and it will happen, and the good news is it is being driven mostly by market dynamics. With the price of gas where it is, that’s what’s driving it,” he said.

From 2008-2012, natural gas consumption in the U.S. has risen by nearly 10% and it is on pace to grow again in 2013. However, during that same time period natural gas prices have fallen by nearly 70%, according to the U.S. Energy Information Administration. Natural gas prices are averaging 36% higher so far in 2013.

Higher gas prices earlier in the last decade combined with new fracking technology drove a production boom, like the ramp-up seen in Arkansas’ Fayetteville Shale play, and that huge increase in natural gas supplies drove prices down.

With the lower prices, production in Arkansas declined and the industry has moved to parts of the country where “wet” gas – which has more versatility in its usage – has been drilled. Arkansas’ gas harvest is considered “dry.”

“To be simplistic about it – it’s price and geography,” Durbin said of Arkansas’ decline in shale play activity. “We’ve seen a lot of areas where we’ve seen companies move out of ‘dry’ gas production and going into the liquids and the oils. But that’s what gets back to the demand side. If we can bring demand up, that’s what’s going to bring production back in all of these areas.”

Durbin also sees a shift in direct consumer usage of natural gas, particularly through vehicles.

“There are great opportunities, I think, in the transportation area. The other benefit from the transportation side is – from my standpoint – it’s so obvious to the consumer,” said Durbin.

He noted that new vehicles, such as Ford F-150 trucks, are being manufactured to accommodate natural gas as fuel.

“As the general public sees that the cars that they love, the vehicles that they love, have every bit of performance. .. when they see the huge cost savings and emission reductions – those are all starting to figure into people’s decisions on the vehicles they want to purchase,” Durbin said.

He also cited Arkansas’ fledgling compressed natural gas (CNG) stations that have sprouted in central and western Arkansas. Other states with more mature natural gas development, such as Oklahoma and Texas, have seen significant CNG station growth.

“I think it is going to be a slow process on the light-duty vehicles. You’re still going have the chicken-and-egg infrastructure issue,” Durbin said.