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CNN Live Sunday
Interview With Michael Zenker
Aired June 22, 2003 - 18:11 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MARTIN SAVIDGE, CNN ANCHOR: Anyone who has opened a gas bill lately can bear witness to the fact that prices are climbing, but is there a shortage of natural gas in this country?
Mike Zenker is with Cambridge Energy Research Associates. He heads a group which looks at natural-gas concerns for the U.S. and Canada, and he says there is a shortage, a shortage that could send prices even higher in this country.
Thanks very much for joining us, Mike.
MICHAEL ZENKER, NORTH AMERICAN NATURAL GAS: Good to see you, Martin.
SAVIDGE: Well, let's talk about it. What is the supply situation right now with natural gas?
ZENKER: Well, it is a troubled picture. We do see this year as the second consecutive year of supply decline in the combined U.S./Canadian market, and this is a situation that clashes with demand which is trying to grow, and that's causing prices to move higher.
SAVIDGE: A lot of people would probably say, "Well, I'm not going to worry about this until the wintertime." But it's a problem now, isn't it?
ZENKER: It is a problem now because we're increasingly dependent on natural gas to fuel power plants. In fact, we've built 200,000 megawatts or about 400 large power plants across the U.S., and those are increasingly using gas for power generation.
SAVIDGE: What are other ways natural gas may be used that we don't think about?
ZENKER: It's actually a very important feed stock for a lot of important plastics and chemicals. It's an important feed stock to produce fertilizer. In fact, we've seen fertilizer costs move up dramatically in the United States. It is used intensively in steel manufacturing, in refining and in a lot of other petrochemical applications.
SAVIDGE: So if the price goes up then it also gets passed down to the consumer. What about international suppliers? Why can't we pull it in from there?
ZENKER: Well, in fact, we are moving in that direction, and maybe if there is good news to the situation, it's that companies are moving to import natural gas from a variety of overseas locations. The problem is that it's going to take about three to four years for those new facilities to open to an extent that it brings sufficient quantities to drop prices back down.
So we've got a three-year problem here, while we're going to be dealing with a limited-supply situation, awaiting those new-frontier resources coming in from places like Alaska or imported natural gas from overseas.
SAVIDGE: How much do you think the price is going up as a result of the shortage?
ZENKER: We're seeing wholesale prices this year moving up about 70 percent over levels last year and staying that the level for the next few years.
To the consuming public, what that means is their heating bills and their electricity bills will be moving up this year and next as a result of that. But as you've indicated, the industrial users are really going to take the bigger hit in this market.
SAVIDGE: And I know this isn't a quick fix, but technology -- is there anything out there that maybe would help the problem?
ZENKER: In fact technology has been helping by bringing a lot of the smaller resources to market much more rapidly. We have been able to get access to locations where there's natural gas domestically where we hadn't been able to do that before.
But we're running out of new-technology solutions to keep up with production of natural gas. We're about at the limit of existing technology. Perhaps there's a breakthrough around the corner, but we don't see it just yet.
SAVIDGE: All right. Mike Zenker, thanks very much.
It's troubling, but maybe in the future we can work our way around it.
ZENKER: Thank you.
SAVIDGE: Thank you very much. Mike Zenker is the senior director of the North American Natural Gas.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 22, 2003 - 18:11 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MARTIN SAVIDGE, CNN ANCHOR: Anyone who has opened a gas bill lately can bear witness to the fact that prices are climbing, but is there a shortage of natural gas in this country?
Mike Zenker is with Cambridge Energy Research Associates. He heads a group which looks at natural-gas concerns for the U.S. and Canada, and he says there is a shortage, a shortage that could send prices even higher in this country.
Thanks very much for joining us, Mike.
MICHAEL ZENKER, NORTH AMERICAN NATURAL GAS: Good to see you, Martin.
SAVIDGE: Well, let's talk about it. What is the supply situation right now with natural gas?
ZENKER: Well, it is a troubled picture. We do see this year as the second consecutive year of supply decline in the combined U.S./Canadian market, and this is a situation that clashes with demand which is trying to grow, and that's causing prices to move higher.
SAVIDGE: A lot of people would probably say, "Well, I'm not going to worry about this until the wintertime." But it's a problem now, isn't it?
ZENKER: It is a problem now because we're increasingly dependent on natural gas to fuel power plants. In fact, we've built 200,000 megawatts or about 400 large power plants across the U.S., and those are increasingly using gas for power generation.
SAVIDGE: What are other ways natural gas may be used that we don't think about?
ZENKER: It's actually a very important feed stock for a lot of important plastics and chemicals. It's an important feed stock to produce fertilizer. In fact, we've seen fertilizer costs move up dramatically in the United States. It is used intensively in steel manufacturing, in refining and in a lot of other petrochemical applications.
SAVIDGE: So if the price goes up then it also gets passed down to the consumer. What about international suppliers? Why can't we pull it in from there?
ZENKER: Well, in fact, we are moving in that direction, and maybe if there is good news to the situation, it's that companies are moving to import natural gas from a variety of overseas locations. The problem is that it's going to take about three to four years for those new facilities to open to an extent that it brings sufficient quantities to drop prices back down.
So we've got a three-year problem here, while we're going to be dealing with a limited-supply situation, awaiting those new-frontier resources coming in from places like Alaska or imported natural gas from overseas.
SAVIDGE: How much do you think the price is going up as a result of the shortage?
ZENKER: We're seeing wholesale prices this year moving up about 70 percent over levels last year and staying that the level for the next few years.
To the consuming public, what that means is their heating bills and their electricity bills will be moving up this year and next as a result of that. But as you've indicated, the industrial users are really going to take the bigger hit in this market.
SAVIDGE: And I know this isn't a quick fix, but technology -- is there anything out there that maybe would help the problem?
ZENKER: In fact technology has been helping by bringing a lot of the smaller resources to market much more rapidly. We have been able to get access to locations where there's natural gas domestically where we hadn't been able to do that before.
But we're running out of new-technology solutions to keep up with production of natural gas. We're about at the limit of existing technology. Perhaps there's a breakthrough around the corner, but we don't see it just yet.
SAVIDGE: All right. Mike Zenker, thanks very much.
It's troubling, but maybe in the future we can work our way around it.
ZENKER: Thank you.
SAVIDGE: Thank you very much. Mike Zenker is the senior director of the North American Natural Gas.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
