Mar. 6--The sharp slowdown in Barnett Shale drilling not only means that the big natural gas field will peak earlier than expected but also that most of the major pipelines aimed at moving gas out of the field are already in place, the chief of one of the nation's biggest pipeline companies said Thursday.

Barry Davis, president of Dallas-based Crosstex Energy, told a Fort Worth audience that producers will still need to build the smaller pipeline networks, called gathering systems, to carry gas from their wells to processing plants. But "probably 80 or 90 percent of the capital spending" on big transmission lines to distant trading hubs has been done, said Davis, who made his remarks at an energy investment conference sponsored by the Texas Christian University Energy Institute.

Davis estimated that the Barnett Shale's takeaway capacity -- the amount of natural gas that pipelines can carry -- stands at 5.5 billion to 6 billion cubic feet a day, or Bcf. That's compared with producers' and analysts' estimates of 4.6 to 5 Bcf a day at year's end.

Today's expected peak is far short of early predictions that the field could grow to 8 or 9 Bcf a day, Davis said, a level that would have required the industry to plow millions more into pipeline infrastructure. In retrospect, he said, the flattening of the Barnett's production rate will probably result in a more effective use of those pipelines. "So now the Barnett gets to 4.5 or 5 billion Bcf," he said, and as drilling stabilizes, "it just stays there forever."

That's in line with comments from some producers in the field, who note that even if the field's daily production doesn't peak as high as it might have if the drilling frenzy continued, the field will still produce at a high level for decades.

The huge changes seen in the last six months in the outlook for the Barnett Shale and the broader energy markets was a common theme of the conference's speakers. Prices for natural gas and crude oil are down about 70 percent from their highs last year, and drilling is off by about half.

Allison Nathan, a senior researcher at Goldman Sachs investment bankers, warned that the U.S. natural gas market, which faces "a very large surplus," isn't likely to revive quickly.

The nation experienced "extremely weak demand this winter, even though we actually had pretty cold weather," Nathan said. "We are going to run out of storage capacity by the end of summer," she said, which could leave natural gas prices at roughly their current levels for the rest of the year.

"Globally, natural gas demand has come down dramatically," Nathan said, but equally sharp cuts in new investment should likewise pare supply. She said she expects U.S. natural gas production, which grew the past three years, to decline this year and next.

Texas State Comptroller Susan Combs, in response to a question from the audience, suggested that perhaps the state should consider creating a consortium, along the lines of past efforts to boost the state's electronics industry, to investigate ways to encourage the development of new uses of natural gas.

JIM FUQUAY, 817-390-7552

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