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EIA: US to become net natural gas exporter in second half of 2017

July 13, 2016

The United States is expected to become a net exporter of natural gas during the second half of 2017 as pipeline exports to Mexico continue to rise and Sabine Pass LNG ramps up capacity, according to the Energy Information Administration (EIA).

Natural gas pipeline exports to Mexico have risen this year, and EIA expects that growth to continue due to growing demand from Mexico’s electric power sector and because of flat natural gas production in the country, the agency said in its July Short-Term Energy Outlook.

Gross pipeline exports to Mexico are expected to increase by 0.7 Bcf/d in 2016 before falling by 0.2 Bcf/d in 2017 to an average of 5.3 Bcf/d, EIA said.

EIA said in the report it expects LNG gross exports to rise to an average of 0.5 Bcf/d in 2016, with the startup of Cheniere’s Sabine Pass liquefaction and export plant in Louisiana, which sent out its first cargo in February this year.

According to the agency, gross LNG exports are expected to average 1.3 Bcf/d in 2017, as Sabine Pass ramps up capacity.

“With expected growth in gross exports, net imports of natural gas decline from 2.6 Bcf/d in 2015 to 0.2 Bcf/d in 2017, and the United States is expected to become a net exporter of natural gas during the second half of 2017,” EIA said.

Natural Gas Prices

The Henry Hub natural gas spot price averaged $2.59/MMBtu in June, up 67 cents/MMBtu from the average price in May, the agency said.

EIA expects natural gas prices to gradually rise throughout the forecast period but remain lower than they were last summer.

Forecast Henry Hub natural gas prices average $2.36/MMBtu in 2016 and $2.95/MMBtu in 2017, according to EIA.

Natural gas futures contracts for October 2016 delivery that were traded during the five-day period ending July 7 averaged $2.88/MMBtu.

“Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for October 2016 contracts at $2.00/MMBtu and $4.14/MMBtu, respectively.”

In early July 2015, the natural gas futures contract for October 2015 delivery averaged $2.85/MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $1.92/MMBtu and $4.24/MMBtu, EIA said.