EIA: U.S. natural gas prices, production, exports rise in 2018

In 2018, the average annual Henry Hub natural gas spot price increased to $3.16 per million British thermal units (MMBtu), up 15 cents from the 2017 average, according to the U.S. Energy Information Administration.

Prices increased gradually through much of the year, with significant price increases during October and November, before declining at the end of December, EIA said.

Growing U.S. production and low temperatures during the winter months supported increased natural gas consumption through 2018.

In addition, continued increases of U.S. natural gas exports by pipeline to Mexico and additional liquefied natural gas (LNG) export capacity that came online during the year resulted in the United States exporting more natural gas than it imported for the second year in a row.

During January 2018, natural gas spot prices spiked in the Northeast as a period of prolonged cold weather affected much of the eastern United States.

In November, natural gas prices again rose as many areas of the United States experienced colder-than-normal temperatures. Several weeks of inventory withdrawals in mid-November placed upward pressure on prices, which reached $4.70/MMBtu at the Henry Hub, or $1.65/MMBtu higher than on the same date in 2017.

Prices fell at Henry Hub throughout the month of December, and as of January 2, 2019, prices were $2.79/MMBtu.

When final data become available in the coming months, EIA expects that U.S. natural gas production will have reached record levels in 2018.

Through the first ten months of 2018, dry natural gas production in the United States was 11% higher in 2018 compared with the same period in 2017. Growth has been driven by production increases in the Appalachian Basin in the Northeast, the Permian Basin in western Texas and New Mexico, and the Haynesville Shale in Texas and Louisiana.

Domestic consumption of natural gas also increased in 2018. This rise is largely driven by natural gas-fired plants replacing coal-fired plants in the electricity fuel mix, with consumption 17% higher than 2017 levels through the first ten months of the year.

Increased industrial sector investment and the need for space heating and air conditioning contributed to annual growth in natural gas consumption across the industrial (5%), commercial (12%), and residential (16%) sectors during the same period.

Continued growth of U.S. LNG exports and U.S. pipeline exports to Mexico resulted in the United States exporting more natural gas than it imported for the second year in a row. Exports of natural gas to Mexico by pipeline exceeded 5 Bcf/d in July 2018 following expansions in cross-border pipeline capacity.

Capacity additions at the Sabine Pass LNG export facility in Louisiana and the start of commercial operations at the Cove Point LNG facility in Maryland contributed to the expansion of LNG exports.