U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Natural Gas Consumption
Total U.S. natural gas consumption averaged 75.1 billion cubic feet per day (Bcf/d) in 2016. EIA expects natural gas consumption to increase by 0.3 Bcf/d (0.4%) in 2017 and by 1.5 Bcf/d (2.0%) in 2018. In 2017, increases in total natural gas consumption are mainly because of higher residential and commercial consumption based on a forecast of colder winter temperatures. In 2018, the electric power and industrial sectors are the main drivers of consumption growth.
Based on forecasts by the National Oceanic and Atmospheric Administration (NOAA), EIA projects heating degree days (HDD) to be 6.7% higher in 2017 than in 2016, which had a warmer-than-normal winter. EIA expects residential and commercial natural gas consumption to increase by 6.0% and by 5.2%, respectively, in 2017. In 2018, residential and commercial consumption are both projected to be roughly unchanged from 2017 levels.
Forecast natural gas use in the electric power sector, which increased by 4.2% in 2016, falls by 4.4% in 2017 as rising natural gas prices contribute to increasing coal use for electricity generation. Forecast electric power sector consumption of natural gas increases by 2.7% in 2018 as overall electricity generation rises.
Industrial sector consumption of natural gas increased by 1.9% in 2016, and it is forecast to rise by 0.6% in 2017 and by 1.9% in 2018. New fertilizer and chemical projects contribute to industrial sector natural gas consumption growth. A long period of low natural gas prices in the United States has made it economical for companies to upgrade existing ammonia plants and plan for the construction of new nitrogen projects, adding an estimated production capacity of 5.0 million tons per year through 2019.
Natural Gas Production and Trade
EIA estimates that dry natural gas production averaged 72.4 Bcf/d in 2016, a decline of 1.8 Bcf/d (2.4%) from 2015. This decline is the first time annual average natural gas production has fallen since 2005. Production of marketed natural gas fell 1.8% in 2016 from 2015 levels. The higher decline rate for dry natural gas production compared with marketed production reflects higher rates of ethane recovery.
Dry natural gas production is forecast to increase in 2017 and 2018, rising by 1.4 Bcf/d (2.0%) and by 2.8 Bcf/d (3.8%), respectively. The return to increasing production reflects a forecast of higher Henry Hub natural gas spot prices as well as pipeline buildout, particularly in the Marcellus and Utica natural gas producing regions.
Natural gas pipeline exports increased by 1.0 Bcf/d (21.7%) to 5.9 Bcf/d in 2016, largely because of rising exports to Mexico. EIA expects pipeline exports of natural gas to continue rising 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 0.1 Bcf/d in 2017 and by 0.4 Bcf/d in 2018.
Liquefied natural gas (LNG) exports increased from almost zero in 2015 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. LNG exports are expected to average 1.4 Bcf/d in 2017 as Sabine Pass ramps up capacity in the middle of the year. In 2018, LNG exports are forecast to average 2.6 Bcf/d. The 2018 growth is driven by the expected start of Cove Point LNG in Maryland in December 2017 and new projects at Cameron LNG and Freeport LNG on the Gulf Coast during the second half of 2018.
With expected growth in gross exports, net imports of natural gas decline from 1.7 Bcf/d in 2016 to 0.7 Bcf/d in 2017. The United States is expected to become a net exporter of natural gas for the year in 2018, with net exports averaging 0.6 Bcf/d.
Natural Gas Inventories
Although natural gas inventories reached a record high of 4,047 Bcf during mid-November, draws in recent weeks have been larger than normal, and inventories ended December below the previous five-year average for the first time since the end of April 2015. Based on an assumption of relatively normal temperatures in the first quarter of 2017, EIA forecasts inventories to be 1,745 Bcf at the end of March, which would be 3.3% below the five-year average for that time of year. Inventories are expected to build at a pace that is slower than the five-year average from the end of March through October, bringing inventories to a projected 3,667 Bcf at the end of October, which is 5.0% below the previous five-year average for the end of October. In 2018, inventories are expected to largely follow the typical seasonal pattern.
Natural Gas Prices
The Henry Hub natural gas spot price averaged $2.51/MMBtu in 2016, and it is expected to increase to an average of $3.55/MMBtu in 2017 and then average $3.73/MMBtu in 2018. Prices generally increased throughout 2016 because of high natural gas use for electricity generation during the hot summer and because of declining production. Henry Hub spot prices in December 2016 averaged $3.59/MMBtu, when inventories fell below the five-year average. This was the first time the price averaged more than $3/MMBtu for a month since December 2014.
Higher residential and commercial space heating demand during the first quarter of 2017 compared with a year earlier (which was very warm) is expected to keep prices above $3.50/MMBtu into April. With natural gas production also expected to be lower than year-ago levels in the first quarter of 2017, EIA expects inventory levels to be below the previous five-year average through much of the winter, putting upward pressure on natural gas prices. In 2018, upward price pressures are expected to continue, as both domestic consumption and exports growth are forecast to accelerate.
Natural gas futures contracts for April 2017 delivery that were traded during the five-day period ending January 5 averaged $3.38/MMBtu. Current options and futures prices indicate that market participants place the lower and upper bounds for the 95% confidence interval for April 2017 contracts at $2.39/MMBtu and $4.77/MMBtu, respectively. Last year at this time, the natural gas futures contracts for April 2016 delivery averaged $2.38/MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $1.61/MMBtu and $3.52/MMBtu, respectively.
|U.S. Natural Gas Summary|
|2015||2016||2017 projected||2018 projected|
|Prices||(dollars per thousand cubic feet)|
|Henry Hub Spot||2.72||2.60||3.67||3.85|
|Supply||(billion cubic feet per day)|
|Dry Gas Production||74.14||72.36||73.78||76.62|
|Consumption||(billion cubic feet per day)|
|Electric Power Sector||26.34||27.45||26.24||26.96|
|Primary Assumptions||(percent change from previous year)|
|Heating Degree Days||-10.2||-5.9||6.7||-0.2|
|Cooling Degree Days||14.6||4.8||-8.5||-0.0|
|Natural-gas-weighted Industrial Production||1.3||0.2||0.8||3.5|
Interactive Data Viewers
|Table WF01. Average Consumer Prices and Expenditures for Heating Fuels During the Winter|
|Table 1. U.S. Energy Markets Summary|
|Table 2. Energy Prices|
|Table 5a. U.S. Natural Gas Supply, Consumption, and Inventories|
|Table 5b. U.S. Regional Natural Gas Prices|
|Table 8. U.S. Renewable Energy Consumption|
|Table 9a. U.S. Macroeconomic Indicators and CO2 Emissions|
|Table 9b. U.S. Regional Macroeconomic Data|
|Table 9c. U.S. Regional Weather Data|
|Today In Energy||Daily|
|Natural Gas Weekly Update||Weekly|
|Peak Underground Working Storage Capacity||Annual|
|2016-2017 Winter Fuels Outlook||Oct-2016|
|2016 Summer Fuels Outlook Slideshow||Apr-2016|
|2015-2016 Winter Fuels Outlook Slideshow||Oct-2015|
|2015 Summer Fuels Outlook Slideshow||Apr-2015|
|Weather Sensitivity in Natural Gas Markets||Oct-2014|
|2014-2015 Winter Fuels Outlook Slideshow||Oct-2014|
|2014 Outlook for Gulf of Mexico Hurricane-Related Production Outages||Jun-2014|
|Energy-weighted industrial production indices||Mar-2014|
|Constraints in New England likely to affect regional energy prices this winter||Jan-2013|
|Change in STEO Regional and U.S. Degree Day Calculations||Sep-2012|
|2012 Outlook for Hurricane-Related Production Outages in the Gulf of Mexico||Jun-2012|
|Changes in Natural Gas Monthly Consumption Data Collection and the Short-Term Energy Outlook||Dec-2010|
|Trends in U.S. Residential Natural Gas Consumption||23-Jun-2010|
|Probabilities of Possible Future Prices||Apr-2010|
|Energy Price Volatility and Forecast Uncertainty||Oct-2009|
|The Implications of Lower Natural Gas Prices for Electric Generators in the Southeast||May-2009|