Profit potential is ahead, as the rebounding domestic economy demands more natural gas, says Mark Papa, president of EOG Resources Co. This additional gas will come from an industry that has managed to keep production flat during the past seven years, even with the help of 3-D seismic mapping, improved fracturing treatments, horizontal drilling and massive discoveries in the deepwater Gulf of Mexico. Papa was among speakers at a recent Randall Morton International/Resources Marketing International oilfield forum. Capital spending on U.S. gas programs grew 70% in 2001, he said, producing a meager 0.5% increase in gas production. 2001 fourth-quarter gas production dropped 20% from the same quarter a year earlier as the industry's 29% decline rate (everywhere but Appalachia) overpowered attempts at growth, Papa said. More money and better technology held production around 59 billion cubic feet (Bcf) per day. Papa suggested the state of the economy doesn't seem to matter. He anticipates production capacity in fourth-quarter 2002 will be 6% less than in fourth-quarter 2001. That imbalance should lead to $3.50-per-million Btu (MMBtu) gas in 2003. Papa said the industry needs $3.25 per MMBtu to generate an adequate return. Conoco Inc. chief economist Marianne Kah said the recent U.S. recession "was extremely shallow and the recovery probably will be shallow." Her projections bear out a less-than-enthusiastic recovery. She estimated gross domestic product growth at 0.4% this year, up from 0.1% in 2001but down from 0.6% in 2000 and 1.6% in 1999, "the last normal increase." U.S. oil demand has held up well, and it could meet supply restrictions in a recovery, maintained Matthew Simmons, president of Simmons & Co. International, a Houston-based investment-banking firm. He noted that in 1999, the U.S. used 19.52 million barrels of oil per day. That figure rose to 19.7 million in 2000 and dropped to only 19.57 million in 2001. Even this February, demand was 19.35 million barrels per day. -Don Lyle