EIA s Natural Gas Outlook Through 2025

Transcription

1 EIA s Natural Gas Outlook Through 225 Howard Gruenspecht Deputy Administrator Energy Information Administration (howard.gruenspecht@eia.doe.gov) for The Fertilizer Institute Outlook Conference October 26, 24 Annapolis, MD

2 End-Use Consumption by Sector and Region, 22 Residential Commercial Industrial Electric Power 3 Tcf 2 Tcf 1 Tcf.5 Tcf Source: Natural Gas Annual, 22.

3 U.S. Seasonal Natural Gas Load Patterns By Sector (MMcfd) 5, 1, 15, 2, 25, 3, 35, Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Jul-2 Sep-2 Nov-2 Jan-3 Mar-3 May-3 Jul-3 5, 1, 15, 2, 25, 3, 35, Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Jul-2 Sep-2 Nov-2 Jan-3 Mar-3 May-3 Jul-3 5, 1, 15, 2, 25, 3, 35, Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Jul-2 Sep-2 Nov-2 Jan-3 Mar-3 May-3 Jul-3 Source: EIA. 5, 1, 15, 2, 25, 3, 35, Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Jul-2 Sep-2 Nov-2 Jan-3 Mar-3 May-3 Jul-3 Residential Industrial Commercial Electric Power

4 Short-Term Outlook for Natural Gas WELLHEAD PRICE: $5.52 per Mcf in 24; $5.63 per Mcf in 25 CONSUMER PRICES: Higher than last winter; Prices (+11%) Total Expenditures (+15%) CONSUMPTION: Increased demand this heating season, and in 25 SUPPLY : Growth in 25 Current storage inventory about 8% higher than 5-year average Production increase in 25 after decline in 24 New well completions remain high but production from existing wells is declining Modest, but steady increases in LNG imports CAVEAT: Outlook incorporates NOAA weather forecast. Extremes in market or weather conditions could change this outlook.

5 Dollars per Thousand Cubic Feet Natural Gas Spot Prices Are Expected to Average $6.1 This Year (Base Case and 95% Confidence Interval*) Average Spot Price: about $6.1 /Mcf in 24 about $6.18 /Mcf in Projections. Jan-99 May-99 Sep-99 Jan- May- Sep- Jan-1 May-1 Sep-1 Jan-2 May-2 Sep-2 Jan-3 May-3 Sep-3 Jan-4 May-4 Sep-4 Jan-5 May-5 Sep-5 Monthly *The confidence intervals show +/- 2 standard errors based on the properties of the model. The ranges do not include the effects of major supply disruptions. Sources: Short-Term Energy Outlook, October 24.

6 U.S. Natural Gas Prices $16 $14 $12 Re sidential $1 $8 $6 $4 Commercial Industrial Electric Utilities Dollars Per Mcf $2 Wellhead $ Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Source: Short-Term Energy Outlook, October 24.

7 Working Gas in Underground Storage Is Above Normal Notes: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 1999 through 23. Source: Weekly storage values from March 15, 22, to the present are from Form EIA-912, "Weekly Underground Natural Gas Storage Report." Values for earlier weeks are from the Historical Weekly Storage Estimates Database.

8 Active Rig Count Is Higher than Ever But Production Growth Is Limited Number Gas Rotary Rigs U.S. Dry Gas Production & Rotary Rigs Average Annual Rig Count Sources: Baker Hughes Gas Rig Count, and Short-Term Energy Outlook, October 24 Dry Gas Production Trillion Cubic Feet Production

9 A Growing Percentage of Production Flows from Wells Three Years Old or Less Percent Total Wellhead Capacity < 1 Year Old < 2 Years Old < 3 Years Old Source: EIA.

10 Pipeline Imports Decline as LNG Imports Increase 4,5 4, 3,5 3, LNG Imports: 23: 51 Bcf 24: 67 Bcf 25: 84 Bcf Projections Billion Cubic Feet 2,5 2, 1,5 1, Pipeline LNG Source: Short-Term Energy Outlook October, 24.

11 Increases in Annual Demand Are Not Expected Until 25 12% 1% History Projection 9 8 8% 7 Percent Change 6% 4% 2% % -2% Billion Cubic Feet per Day -4% 1-6% Source: Short-Term Energy Outlook, October 24.

12 U.S. Winter Natural Gas Demand Growth 8.% 6.% 4.% 2.% Res. And Comm. Industrial Elec. Power Total.% -2.% -4.% -6.% -8.% Projections Average Weather, increased power sector demand drives winter gas demand Source: Short-Term Energy Outlook, October 24.

13 Natural Gas Production, Consumption, and Imports, (trillion cubic feet) History Consumption Projections Net Imports 2 15 Production Natural Gas Net Imports, 22 and 225 (trillion cubic feet) Source: EIA, 24 Annual Energy Outlook Pipeline Liquefied Natural Gas

14 U.S. Natural Gas Consumption by Sector, (trillion cubic feet) 12 1 History Projections Industrial 8 6 Electric Generators Residential 4 Commercial 2 CNG Vehicles Source: EIA, 24 Annual Energy Outlook.

15 Technically Recoverable U.S. Natural Gas Resources as of January 1, 22 (trillion cubic feet) Proved 183 Inferred nonassociated Undiscovered nonassociated Unconventional Other unproved Offshore Onshore Offshore Onshore Coalbed methane 475 Shale gas Tight gas Alaska Lower 48 associated-dissolved Total: 1,279 trillion cubic feet Source: Energy Information Administration

16 U.S. Dry Natural Gas Production, (trillion cubic feet) History Projections 1 9 Onshore Unconventional Nonassociated Onshore Conventional Associated/Dissolved Non-associated Offshore Alaska Source: 24 Annual Energy Outlook

17 U.S. Unconventional Natural Gas Production, (trillion cubic feet) 7 6 History Projections Tight sands Coalbed methane 1 Gas shales Source: 24 Annual Energy Outlook

18 Incremental Natural Gas Production by Region, and (trillion cubic feet) West Coast* Mid-continent.29.2 Northeast Rocky Mountain Southwest Gulf Coast Offshore * Includes Offshore Source: 24 Annual Energy Outlook

19 Net U.S. Imports of Natural Gas, (trillion cubic feet) History Projections Liquefied Natural Gas Canada Mexico Source: 24 Annual Energy Outlook

20 Lower 48 Natural Gas Wellhead Prices, (22 dollars per thousand cubic feet) Reference case (nominal dollars) $8.44 $ Slow technology $5.1 Reference case $4.4 Rapid technology $ History Projections Source: 24 Annual Energy Outlook

21 KEY CHANGES IMPACTING NATURAL GAS MARKETS BETWEEN AEO25 and AEO24 DEMAND: CHANGE Lower capital costs for gas powered generation plants Lowered growth in bulk chemical industry IMPACT More gas use for generation. Less industrial gas use SUPPLY: Higher costs and resources Combined impact is mixed Higher costs for onshore gas and lower finding rates Upward pressure on gas prices Tax and loan incentives for Alaska gas pipeline Alaska pipeline available earlier Higher costs and lower domestic production only Higher natural gas prices partially offset by increased LNG imports IMPORTS/EXPORTS: Reduced LNG costs, increased expansion potential LNG more attractive CANADA: reduced coalbed methane production Lower exports to the U.S.

22 In Summary: EIA s Natural Gas Outlook Short-Term Continued market tightness. Some demand recovery. Modest production increase. Imports: LNG increases, pipeline decreases. Long-Term Technology advances and access to additional supply sources will moderate gas prices. U.S. LNG market is expected to grow. Electricity use of gas, coal and renewables expected to increase.

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