EnCana trying to boost demand for natural gas

CALGARY — Faced with an overabundance of natural gas in North America, EnCana Corp. (TSX:ECA) is trying to stoke demand for the fuel, which it says can be used as a cleaner option for anything from power generation to transportation.

CALGARY — Faced with an overabundance of natural gas in North America, EnCana Corp. (TSX:ECA) is trying to stoke demand for the fuel, which it says can be used as a cleaner option for anything from power generation to transportation.

“Natural gas is abundant, it’s affordable and it’s available today to be utilized for much more than it has historically been used for,” Eric Marsh, an EnCana vice-president, told a natural gas conference Tuesday.

EnCana, one of the continent’s biggest natural gas producers, is the only Canadian member of the American Natural Gas Alliance, a lobby group set up in March to tout natural gas as a plentiful and relatively clean source of energy.

ANGA’s 27 members produce 40 per cent of the natural gas supplies in North America.

A few of the U.S. players, like Devon Energy Corp. (NYSE:DVN), Apache Corp. (NYSE:APA) and EOG Resources Inc. (NYSE:EOG), have operations in Canada.

“The natural gas industry for the most part has done a very poor job of getting out its message,” Marsh told the conference, hosted by the Canadian Energy Research Institute and the Canadian Society for Unconventional Gas.

Marsh is chairman of a committee at ANGA that deals with cross-border issues, and said progress is being made on getting more Canadian firms into the fold.

Marsh said he’s also been trying to warm policy-makers in Ottawa and the provincial level to the idea.

CSUG president Mike Dawson said in a recent interview that he’d like to see industry and government work together on policy that would place natural gas prominently in the energy mix.

“That’s the part that I find a little bit frustrating. We talk the talk, but are we prepared to walk the walk when it comes to these hard choices about energy security in North America?” he said.

“It’s a huge resource base, and yet I seem to feel that at times we’re a bit languishing the opportunity, thinking that the day of reckoning is not coming.”

Since new technologies began unlocking huge gas resources trapped in shale rock formations throughout North America, the continent has become awash in supplies.

That, combined with a recession that has dampened demand for the fuel, has pushed natural gas prices well below the level at which most drilling makes economic sense.

Natural gas settled at US$3.576 per 1,000 cubic feet on the New York Mercantile Exchange on Tuesday. Most drillers need prices above about US$6 to turn a profit.

Despite the current bearish picture, natural gas will gain popularity in the longer term because of new environmental rules likely to come into effect, Marsh said.

EnCana would like to see much of North America’s transportation fuel supply — dominated by gasoline and diesel — be displaced by natural gas.

However, a lot of work needs to get done on selling consumers on natural gas as a transportation fuel. Several models of natural gas-fuelled cars are available in Europe, but in Canada and the United States there is only one: the Honda Civic.

“One of the challenges you have is when you’re the only manufacturer of something, you might charge a premium for that vehicle,” Marsh said.

“When you look at Europe, for instance, those cars are competitive with gasoline or diesel. They’re slightly more but they’re competitive.”

Filling up a vehicle with natural gas is also a challenge when stations are few and far between.

“You can’t have this chicken and the egg thing where you don’t have enough vehicles offered to the consumer, but then those that are offered, you don’t have enough refuelling centres in many of the areas,” Marsh said, noting that California, Utah and Colorado are making good progress on that front.

Natural gas can also play a larger role in the production of electricity, which is currently dominated by much more carbon-intensive coal.

In parts of the United States, mainly in the West, natural gas is the main fuel for power generation.

“It’s a very strategic thing to do, big emission reductions in the power sector, and we think we can do that for a very reasonable cost,” Marsh said.

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