Natural gas production/consumption retrospective 2010

In 2010, the natural gas industry saw an abundance of production and strong consumption. On an average annual basis, marketed production of natural gas grew to 61.8 billion cubic feet (Bcf) per day, an increase of about 4% from 2009, despite relatively low prices. Natural gas consumption in 2010 rose to a record level of 66.1 Bcf per day, up from 62.6 Bcf per day in 2009.

In 2010, the average annual spot natural gas price at the Henry Hub increased 12% to $4.37 per million British thermal units, but remained significantly lower than average annual prices at Henry Hub for any year between 2003 and 2008.

Overall, 2010 may turn out to be an important bellwether for the industry. It represents the natural gas industry's first year without major economic upheaval since shale gas rose to prominence. Key points:

Production:

• Marketed production of natural gas grew about 4% to 61.8 billion cubic feet (Bcf) per day, and reached its highest recorded level in the lower 48 States. The production gains in the lower 48 States more than offset declines in the Gulf of Mexico, where production continued a long-term decline.
• Net imports of natural gas to the United States in 2010 were at the lowest level since 1994. This was a result of decreases in deliveries of liquefied natural gas from a variety of countries and increases in exports from the United States. Net imports of natural gas represented nearly 11% of total U.S. consumption, the lowest proportion since 1991.

Consumption:

• Consumption of natural gas for electric power generation accounted for about 31% of the total annual natural gas consumed. Natural gas-fired power generation continues to displace coal-fired generation in some regions, when delivered spot prices for natural gas approach those for Appalachian coal (after accounting for the differences in gas and coal plant efficiencies).
• Industrial use of natural gas increased 7% to 18.1 Bcf per day in 2010. Relatively low prices and an improving economy led to increase in production by gas-using industries.