EIA: gas consumption spurred by power sector demand

Total natural gas consumption in the U.S. will average 76.7 Bcf/d in 2015 and 76.6 Bcf/d in 2016, compared with 73.5 Bcf/d in 2014, EIA said in its latest Short-Term Energy Outlook.

Consumption growth in 2015 is largely driven by demand in the industrial and electric power sectors.

EIA projects natural gas consumption in the power sector to grow by 13.7% in 2015 and then fall by 2.7% in 2016.

Low natural gas prices support increased use of natural gas for electricity generation in 2015.

Industrial sector consumption increases by 3.6% in both 2015 and 2016, as new industrial projects come online, particularly in the fertilizer and chemicals sectors, and as industrial consumers continue to take advantage of low natural gas prices.

Consumption of natural gas in the residential and commercial sectors is projected to decline in 2015 and 2016.

Natural Gas Production and Trade

EIA expects that marketed natural gas production will increase by 4.2 Bcf/d (5.7%) and by 1.6 Bcf/d (2.0%) in 2015 and 2016, respectively.

This month’s STEO lowers the 2015 production outlook by 0.3 Bcf/d to reflect revisions in historical data.

However, production remains high and EIA expects continued growth through 2016, with increases in the Lower 48 states expected to more than offset the long-term declining production in the Gulf of Mexico.

Increases in drilling efficiency will continue to support growing natural gas production in the forecast despite relatively low natural gas prices.

Most growth is expected to come from the Marcellus Shale, as a backlog of drilled wells is completed and new pipelines come online to deliver Marcellus gas to markets in the Northeast.

Preliminary data indicate significant production growth in April and the beginning of May.

Increases in domestic natural gas production are expected to reduce demand for natural gas imports from Canada and to support growth in exports to Mexico.

EIA expects exports to Mexico, particularly from the Eagle Ford Shale in South Texas, to increase because of growing demand from Mexico’s electric power sector, coupled with flat Mexican natural gas production.

EIA projects that LNG gross exports will increase to 0.79 Bcf/d in 2016, with the startup of a major LNG liquefaction plant in the Lower 48.

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Source: EIA