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 average $4.50 per MMBtu in September and range between $4.37 and
$4.58 per MMBtu in the last 3 months of 2003 (Short-Term Energy
Outlook, September 2003). Spot prices at the Henry Hub have fallen somewhat from
the unusually high levels that prevailed in the first half of the year and
most of July, as mild summer weather in many areas of the country has reduced
cooling demand and allowed record storage refill rates. As of September 5, working gas levels were
only 5.5 percent below the 5-year average and, barring any disruptions, are
on target to reach 3 Tcf by the end of October. However, gas prices remain
high—wellhead prices this summer are estimated to be 60 to 70 percent higher
than levels last summer. Overall in 2003, wellhead prices are expected to
average $4.84 per MMBtu, which is nearly $2 more than the 2002 annual average
and the largest year-to-year increase on record. For 2004, assuming normal weather, wellhead
prices are projected to drop by about $1 per MMBtu, or almost 20 percent, to
$3.89 per MMBtu, as the overall supply situation improves. Natural gas
production is expected to increase by about 2.4 percent in 2003. Following the downturn in natural
gas-directed drilling activity in 2002, higher natural gas prices and sharply
higher oil and natural gas field revenues continue to drive the resurgence in
drilling this year. The number of rigs drilling for natural gas has totaled
more than 900 since the week ending June 13 and averaged 932 in August. In
2004, production is expected to remain at modestly improved levels. The
prospects for significant reductions in natural gas wellhead prices in 2004
depend on the productivity of the expected upsurge in drilling. Natural gas demand growth
is expected to be flat in 2003 because of reduced demand in the industrial
sector and the sharply lower weather-related demand during the summer months. Demand
for natural gas this summer is estimated to be 2.6 percent less than last
summer’s level, owing largely to the 11 percent fewer cooling
degree-days compared with last summer and the effect of high natural gas
prices on consumption in the industrial and electricity-generating
sectors. In 2004, demand is projected
to remain flat as increases in industrial and commercial sector demand are
offset by lower demand in the electric power sector.
Source: Energy
Information Administration, Short-Term Energy Outlook, September 2003. Need Help? |
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Energy Information Administration, EI 30 |
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