With the U.S. expected to be awash with natural gas in coming years, the resource will be key to fuelling the country’s economy, says an industry executive. However, the president and chief executive of Ponderosa Advisors LLC warned that while gas holds much promise for the U.S., there are tough times ahead for the Rockies.

Speaking during Hart Energy’s Rockies Midstream conference in Denver, Colorado, Porter Bennett painted a future for midstream that includes North American demand concerns, abundant supply, and the hurdles he expects the industry to encounter along the way.

“I think oil, natural gas liquids (NGLs) and natural gas are going to be the engine that transforms the U.S. economy,” Bennett told hundreds of conference attendees gathered at the Colorado Convention Center.

According to Bennett, whose team put together a projection of natural gas production, gas production will increase MidstreamBusiness.com January 2013 27 nationally by 34 billion cubic feet (Bcf) per day by 2030, bringing total production to nearly 100 Bcf per day. In the nearer term, production is expected to increase by 23 Bcf per day between now and 2020, said Bennett.

“What are we going to do with all that gas?” he said. “This is the real question.

“If we don’t find demand, the industry won’t be nearly as successful. As a consequence, the U.S. government and various states that produce gas, the local governments that house the workers and the businesses that support the system won’t have as much success either. Demand is a paramount concern.”

Coal-to-gas switching, growing industrial demand and exports would undoubtedly help relieve the oversupply. It appears exports are indeed in the cards for the U.S., following the release of a Department of Energy-commissioned study which found that liquefied natural gas exports would benefit the U.S. economy.

“Exports are absolutely going to happen,” said Bennett. “The study was a real eyeopener, it’s a terrific piece of work and I think it will help to promote the export market which a very important element of this equation.”

Meanwhile, Bennett said he expects the Rockies to face significant challenges in coming years. Back in 2010, the region was considered “the big dog,” said Bennett, though concerns lingered over how it could move gas east. Today, production in many areas of the Rockies is decreasing as the region’s production and exploration costs rise. The Eagle Ford, Permian and Barnett are currently counted among the U.S.’s major gas suppliers.

“[The Rockies] are going to be the source of supply for the West Coast and local demand, but we’re going to have to fight like hell to get market share in the Midwest and East,” said Bennett, who added that rig counts are also low in many areas of the Rockies.

“I think Colorado has to be really concerned that they’re being moved out of the market because producers have better options elsewhere. That’s what it boils down to.”

To make matters worse, Colorado Oil and Gas Commission data indicated that Colorado could see a decline in gas production in 2012.

“A slight decline in gas production in Colorado means our severance tax collections are not as great, local counties can’t count on it near as much in their property tax assessments and sales taxes, employment and everything else tends to fall from that too,” said Bennett. “This is not good news.”

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