Gas prices will continue to be strong with a potential for storage levels to hit record lows at the beginning of the next heating season, according to a survey of gas companies conducted by Calgary-based Ziff Energy Group.

The third annual gas industry survey of 97 North American companies shows that despite higher gas prices, the industry remains confident about continued growth in consumption — but not worried about competition from alternative fuels in electricity generation.

The companies surveyed in February and March represented producers, end-users, marketers, pipelines, storage operators and local distribution companies.

“Our survey is designed to provide an integrated description of the outlook for the North American gas industry from wellhead to burner tip,” said Ziff Energy CEO Paul Ziff.

“Over the three-year period we have conducted this study, the change in expectations and issues is remarkable — we have found it to be an accurate of the thinking and mood of the North American gas industry.”

Other findings:

* The surveys respondents expect the NYMNEX Henry Hub prices will average near $6US/MMBtu for 2001, well above the minimum price that respondents believe would be necessary to increase North American gas production. With tight storage, either a warm summer or cold winter would produce significant price volatility.

* In response to record drilling levels in the Gulf of Mexico and Canada and a 15-year high for onshore U.S. drilling, producers expect to be producing at least five per cent more by year-end 2001, and nearly half anticipate increasing production by at least 20 per cent by 2005.

* Most expect increased gas production to come from the Gulf Coast (offshore and onshore) and western North America (Canada and the U.S. Rockies). Alaska and Mackenzie Delta, which are most likely to begin deliveries in 2007-2008, will become major supply sources, while the Gulf of Mexico will retain its importance through 2010.

* Respondents expect that storage fill at the beginning of the 2001-2002 heating season will be one of the lowest, if not the lowest on record. If the coming winter is similar to this year’s, winter 2001-2002 prices might be higher than 2000-2001 heating season prices.