The Henry Hub natural gas spot price in the United States averaged $2.82/MMBtu in August, unchanged from the July average, according to the Energy Information Administration.
A hot summer and production declines have put some upward pressure on natural gas prices, although prices remain low enough to support significant natural gas-fired generation, the EIA said in its September Short-Term Energy Outlook.
EIA expects gas prices to gradually rise through the forecast period, averaging 2.42/MMbtu in 2016 and 2.87/MMBtu in 2017.
Natural gas production and trade
EIA’s natural gas marketed production in June, the month of the most recent survey data, averaged 77.5 Bcf/d, which is down 2.7 Bcf/d from the record-high daily average production in February 2016, the agency said.
However, more recent preliminary daily data from third-party sources indicate production increased in July and August.
EIA said it expects production increases in the second half of 2016 and through 2017 in response to forecast increases in prices and in liquefied natural gas (LNG) exports. Forecast natural gas production rises by 0.6% in 2016 and by 3.0% in 2017.
Natural gas pipeline exports to Mexico have risen in 2016. EIA expects that growth to continue because of growing demand from Mexico’s electric power sector and because of flat natural gas production in Mexico. Gross pipeline exports are expected to increase by 0.7 Bcf/d in 2016 to an average of 5.6 Bcf/d before declining slightly in 2017.
EIA projects that LNG gross exports will rise to an average of 0.5 Bcf/d in 2016, with the startup of Cheniere’s Sabine Pass LNG liquefaction plant in Louisiana, which sent out its first cargo in February 2016. Sabine’s second train is currently in the commissioning process. EIA projects that gross LNG exports will average 1.5 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.
The United States is expected to become a net exporter of natural gas beginning in the second quarter of 2017, the EIA said.