EIA Expects Record Gas Demand for 2013

EIA Expects Record Gas Demand for 2013

The U.S. Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook it expects the total natural gas consumption to average a record high 71.2 billion cubic feet per day (Bcf/d) in 2013, an increase of 1.5 Bcf/d (2.1%) from the previous year.

Projected natural gas consumption falls by 1.6 Bcf/d (2.2%) in 2014 because of the forecast 4.6% decline in heating degree days and lower natural gas use by the electric power sector.

In 2015, natural gas consumption increases by 1.4 Bcf/d with growth in use by the industrial and electric power sectors.

The projected year-over-year increases in natural gas prices contribute to declines in natural gas used for electric power generation from 24.9 Bcf/d in 2012 to 22.3 Bcf/d in 2013 and 21.7 Bcf/d in 2014, according to EIA.

However, as retirements of coal power plants rise in 2015 in response to the implementation of the Mercury and Air Toxics Standards, EIA expects natural gas consumption in the power sector to increase to 22.6 Bcf/d.

EIA said that natural gas marketed production will grow at an average rate of 2.1% in 2014 and 1.3% in 2015. Rapid Marcellus production growth is causing natural gas forward prices in the Northeast to fall even with or below Henry Hub prices outside of peak-demand winter months. Consequently, some drilling activity may move away from the Marcellus back to Gulf Coast plays such as the Haynesville and Barnett, where prices are closer to the Henry Hub spot price. EIA projects Gulf of Mexico production will continue a long-term decline and fall slightly in 2014 and moderately in 2015.

LNG imports have declined over the past several years because higher prices in Europe and Asia are more attractive to sellers than the relatively low prices in the United States. Several companies are planning to build liquefaction capacity to export LNG from the United States. The first of the new facilities to liquefy gas produced in the lower-48 states for export is expected to partially come online in the fourth quarter of 2015.

Growing domestic production over the past several years has replaced pipeline imports from Canada, while exports to Mexico have increased. EIA expects these trends will continue through 2015.

EIA projects net imports of 3.0 Bcf/d in 2014 and 2.5 Bcf/d in 2015, which would be the lowest level since 1986. Over the longer term, the EIA Annual Energy Outlook 2014 projects the United States will be a net exporter of natural gas beginning in 2018.

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LNG World News Staff, January 09, 2014; Image: EIA