Annual Energy Outlook 2019 projects increased natural gas production and exports in a lower price environment

EIA’s recently released Annual Energy Outlook 2019 (AEO2019) Reference case projects continued growth in U.S. dry natural production and exports through 2050 as domestic natural gas prices remain relatively low and stable.

U.S. dry natural gas production is forecast to grow by 23% from 75 billion cubic feet per day (Bcf/d) in 2017 to 92 Bcf/d in 2020, according to the most recent Short-Term Energy Outlook (STEO). In the AEO2019, the rate of production growth is projected to slow after 2020 but remain positive through 2050, when production reaches 119 Bcf/d.

Dry production growth is expected to outpace U.S. consumption of natural gas. Although consumption is also projected to grow through 2050, it does so at a slower rate than dry production. Natural gas consumption in 2050 is expected to be 96 Bcf/d, up from 74 Bcf/d in 2017.

Natural gas that is produced but not consumed domestically is exported, and the largest growth in exports is from liquefied natural gas (LNG). U.S. LNG exports are projected to increase from an average of 2 Bcf/d in 2017 to 14 Bcf/d by 2030. Much of the increase in LNG exports (8 Bcf/d) occurs between 2017 and 2023 as new LNG export facilities come online.

U.S. natural gas pipeline exports to Mexico and Canada are also expected to increase through 2050. Exports to Mexico will grow from 5 Bcf/d in 2017 to 8 Bcf/d in 2050. Net imports from Canada will decrease as the United States exports more natural gas to Canada while importing less, particularly from western Canada. The net flow of natural gas between the United States and Canada is expected to change to net exports toward the end of the projection period as U.S. export volumes exceed import volumes from Canada.

This growth in production, consumption, and exports comes as U.S. natural gas prices are expected to remain relatively low and stable through 2050. The annual average Henry Hub spot price is expected to remain lower than $4.00 per million British thermal units (MMBtu) in real 2018 dollars through 2034 in the Reference case, and not to exceed $5.00/MMBtu by 2050. The range of Henry Hub natural gas spot prices in the AEO2019 is defined by the resource and technology side cases, indicating that assumptions about technically recoverable resources and costs drive the projections. The High Oil and Gas Resource and Technology side case projects lower prices that remain lower than $4.00/MMBtu through the projection period. The Low Oil and Gas Resource and Technology case projects steeper growth, with prices reaching $4.00/MMBtu by 2023 and exceeding $8.00/MMBtu by 2050.

The AEO2019 presents long-term projections of energy supply, demand, and prices through 2050. It includes a Reference case that assumes laws and regulations remain in force in their current form throughout the projection period, as well as alternate scenarios that incorporate different assumptions about macroeconomic factors, technology and resource availability, and oil markets.

SOURCE: https://www.eia.gov/naturalgas/weekly/