Natural Gas Summary from the Short-Term
Energy Outlook |
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Natural Gas Summary from the Short-Term Energy
Outlook: EIA projects that natural gas wellhead prices will range between $2.63 and $2.72 per MMBtu during the months through October without the wide variations that occurred over the spring and early summer months (Short-Term Energy Outlook, August 2002). Prices are expected to be less variable unless unusually hot weather in late summer results in gas being diverted from storage to meet the added cooling demand, or colder-than-normal weather for October results in an unexpected drawdown of storage stocks. Overall in 2002, wellhead prices are expected to average about $2.73 per MMBtu compared with $4.00 in 2001. Prices during the upcoming heating season (November through March), assuming normal weather, are expected to average close to $3.12 per MMBtu, which is about $0.75 higher than last winter’s price but only about 10-15 percent higher than current prices. Domestic dry natural gas production is projected to fall by about 2.3 percent in 2002 compared with the 2001 growth rate of 2.4 percent. Lower natural gas prices have reduced production and resource development incentives from their highs of last summer. Still, current supplies, including natural gas in storage, appear to be at very comfortable levels. Working gas in storage is estimated to have reached almost 2,600 Bcf by the end of July, which is about 15 percent above the 5-year average and almost 300 Bcf higher than a year ago. Furthermore, gas-directed drilling, while down sharply from the record levels of summer 2001, is still quite strong by a longer historical perspective. The gas rig count as of August 2, 2002, was 729, which is 23 percent above the recent low of 591 for the week of April 5, 2002. Natural gas demand this summer is projected to be 4.6 percent higher than last summer’s level, rather than the 3.6 percent increase projected in the July Outlook. Growth is due partly to the fall in natural gas prices since a year ago and the slowly reviving economy, as well as an expected increase in the amount of natural gas required for power generation this summer. Natural gas demand for the entire year 2002 is projected to increase by 3.0 percent over 2001 levels, an upward revision of projected demand in the last Outlook. The revision is due to expected higher demand figures for the electric power sector. This growth shows up in the industrial sector because of the inclusion of nonutility generation in that category. In 2003, natural gas demand growth is expected to increase by 2.8 percent as the economy continues to recover. In 2003, natural gas demand growth is expected across all sectors.
Source: Energy
Information Administration, Short-Term Energy Outlook, August 2002. File last modified: 08/21/2002 |
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