EIA: Natural gas prices could rise as production finally slows

Fuel Fix ^ | January 25, 2016 | jamesosborne

[thackney]

A historic low in natural gas prices should ease over the next two years, according to a forecast released Monday by the U.S. Energy Information Administration.

Following a December average of $1.93 for the Henry Hub benchmark, federal analysts predict gas prices will average $2.65 per MMBtu this year and $3.22 in 2017.

Oil and gas drillers across the United States have struggled under collapsing commodity prices, driven in part by a boom in domestic shale drilling that has transformed the industry.

But the U.S. gas surge is now beginning to taper off. This year U.S. production is only expected to grow by 0.6 percent – compared to a 7 percent annual growth rate in 2015.

And forecasters are expecting the demand for gas to increase. They pointed to high consumption by the U.S. power sector, as it shifts away from coal and towards gas and renewables. At the same time cheap natural gas had led to increased demand from the industrial sector, which uses the fuel to produce chemicals and fertilizer.

Even with a rise over the next two years, natural gas prices are expected to remain historically cheap. Since 2005 the Henry Hub benchmark has averaged $5.18 per MMBtu.

The recent price shock comes during a shift in U.S. energy policy. The government has authorized the export of liquefied natural gas, with the first facility, Cheniere Energy’s Sabine Pass terminal on the Louisiana Gulf Coast, expected to begin operation this year.

Also, the flow of gas through pipelines connecting U.S. fields to Mexico is increasing rapidly. In October more than 98 billion cubic feet of gas was exported to Mexico, a four-fold increase from the same period in 2010.

In its report Monday, EIA predicted by the summer of 2017 the United States would be a net exporter of natural gas. That has not happened since 1955.

[thackney]

Links to related info at the source

[thackney]

Natural gas prices expected to rise over next two years
https://www.eia.gov/todayinenergy/detail.cfm?id=24672

EIA expects production growth will be relatively flat in 2016, partly in response to lower prices and declining rig activity. With higher prices in 2017, and as new consumption and more export capacity comes online, EIA projects production will pick up slightly.

EIA's forecast of U.S. total natural gas consumption averages 76.6 billion cubic feet/day (Bcf/d) in 2016 and 77.2 Bcf/d in 2017, compared with 75.5 Bcf/d in 2015. Increases in industrial sector consumption drive total consumption growth in 2016 and 2017. Industrial sector consumption of natural gas increases by 3.5% in 2016 and by 2.5% in 2017, as new projects in the fertilizer and chemicals sectors come online. EIA expects a 0.1 Bcf/d (0.3%) decline in consumption of natural gas for power generation in 2016 and a 1.4% decrease in 2017. Natural gas consumption in the residential and commercial sectors is projected to increase in 2016 and 2017, reflecting slightly higher heating demand in those years.

http://www.eia.gov/forecasts/steo/report/natgas.cfm

[Bulwyf]

That’s good for my end, however I don’t think the NDP or Liberals will build any needed pipelines. They are intent on running us into the ground.