EIA says U.S. gas output to rise on higher prices, LNG exports

Natural gas marketed production in the U.S. is expected to rise in late 2016 and through 2017 due to gas price increases and growing LNG exports, according to the Energy Information Administration (EIA).

The agency said in its August Short-Term Energy Outlook that forecast natural gas production is expected to climb by 0.6% in 2016 and by 2.9% in 2017.

EIA’s natural gas marketed production in May averaged 78.1 Bcf/d, which is down 2.0 Bcf/d from the record-high daily average production in February 2016.

According to the EIA, LNG gross exports are expected to rise to an average of 0.5 Bcf/d in 2016, with the startup of Chenier’s Sabine Pass liquefaction and export plant in Louisiana, which sent out its first cargo in February 2016. EIA projects that gross LNG exports will average 1.3 Bcf/d in 2017, as Sabine Pass ramps up capacity.

With expected growth in gross exports, net imports of natural gas are projected to decline from 2.6 Bcf/d in 2015 to a small amount of net exports in 2017. The United States is expected to become a net exporter of natural gas during the second quarter of 2017, the EIA said.

Henry Hub

The Henry Hub natural gas spot price averaged $2.82/MMBtu in July, up 24 cents/MMBtu from the June average, the agency said, adding that the increases reflected warmer-than-normal temperatures in July, which led to increased demand from the electric power sector.

Despite the increase in spot prices, prices still remain low enough to support significant natural gas-fired generation. EIA expects natural gas prices to gradually rise throughout the forecast period.

Forecast Henry Hub prices are expected to average $2.41/MMBtu in 2016 and $2.95/MMBtu in 2017, the agency said.

 

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