1997 ANNUAL REPORTThe Global Growth of Natural Gas Consumption
During the past decade, demand for natural gas has grown faster than for any other major fuel, a trend that is expected to continue into the 21st century. From 1987 through 1996, natural gas consumption grew 25% worldwide and 27% in the United States, topping demand growth for oil and coal in both cases. The driving forces behind the popularity of natural gas are its economical price, environmental benefits, and plentiful resources. These attributes are especially attractive to the domestic electric generation sector, with natural gas projected to fuel 70% of the capacity of all new power plants currently planned or under construction. One factor spurring the U.S. electricity industry’s increasing demand for natural gas is the removal of regulatory barriers that formerly prevented natural gas from being used in new power plants. Another is technological advances in natural gas combined-cycle generating facilities, which are substantially more efficient than traditional plants—sometimes achieving operating and capital costs that are lower than the operating costs alone for existing coal or nuclear plants. In addition, the ongoing deregulation of the electricity industry is creating more intense interfuel competition among primary energy sources, generating a strong market for economically priced natural gas.
Swift Energy’s management has long anticipated strong natural gas demand, having focused on natural gas since the Company’s founding in 1979. Today, 87% of Swift’s reserves are natural gas. Swift has taken advantage of growing domestic opportunities not only by increasing its reserves and production but also by expanding and diversifying its marketing capability as natural gas transportation has been unbundled from other services. In South Texas, for example, the Company can transport and sell natural gas from a large section of its AWP Olmos Field property to nearly anywhere in the eastern half of the United States. This marketing diversity is the result of transportation and processing agreements that Swift successfully negotiated in 1996 with Valero Energy Corp., now part of Pacific Gas & Electric Corp. Under these agreements, Swift can transport up to 75,000 Mcf of natural gas per day from its AWP Field to 11 major pipelines, thus allowing it to sell its production directly to a larger number of potential customers.
In 1997, Swift developed relationships with a number of new end-use customers, including several local distribution companies along the East Coast. Swift also is focusing on potential international marketing opportunities, primarily for natural gas but also for oil, through agreements leading to exploration, development, and production in other nations. These international initiatives, undertaken by the Company’s wholly owned subsidiary Swift Energy International, Inc., are part of Swift’s risk management of its investment capital. New Zealand, Venezuela, and Russia continue to be the Company’s core focus areas outside the United States. In New Zealand, Swift conducted a two-dimensional seismic swath survey and a two-dimensional seismic line during 1997 as part of its exploration of the Onshore Taranaki Basin on the North Island, where New Zealand’s Minister of Energy has awarded two permits to Swift, one in 1995 covering 65,000 acres and the second in 1996 covering an adjacent 69,300 acres. The seismic data acquired will complement the approximately 700 kilometers of existing two-dimensional seismic data and two sets of three-dimensional data that Swift analyzed in 1996. In Venezuela, one of several potential projects that Swift evaluated during 1997 was the construction and operation of a natural gas transmission line in central Venezuela. On March 2, 1998, Swift Energy de Venezuela, C.A., and the privately held Tecnoconsult, S.A., signed a consortium agreement to pursue this project. In Russia, Swift has pursued the development of the Samburg Field in western Siberia since 1993 through a series of agreements with Senega, a Russian joint stock company. In 1997, a new agreement was signed with Senega under which Senega is responsible for the field’s development and Swift retains its 6% net profits interest in the field in return for its past investments.
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This page was last updated on Saturday, February 08, 2003, at 07:28:45 PM. Copyright © 1994-2008 by Swift Energy Company. |
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