* EIA sees 2011 gas output up 3.56 bcfd from 2010
* 2011 gas consumption seen up 0.58 bcfd from 2010 (Adds consumption, LNG data, background)
NEW YORK, July 12 (Reuters) - The U.S. Energy Information Administration on Tuesday sharply raised its estimate for domestic natural gas production growth in 2011, expecting total output this year to be up 5.8 percent from 2010 levels.
In its July Short-Term Energy Outlook, EIA said it expected marketed natural gas production to rise by 3.56 billion cubic feet per day in 2011 to a record 65.39 bcf, up sharply from its June outlook that had output this year at 64.61 bcf daily,
EIA said much of the growth in 2011 gas output was expected to occur in the first three quarters of the year, with a more moderate increase in the fourth quarter.
Gas production has been growing steadily since 2005, primarily because of the boom in horizontal drilling in unconventional shale formations.
Production growth in 2012 was expected to proceed at a much slower pace, increasing 0.58 bcf per day, or 0.9 percent.
With year-over-year 2011 production growth now seen exceeding 2010's 4.5 percent increase, total domestic output this year should easily set an all-time high, eclipsing the previous record high, hit in 1973, of 62.05 bcf daily.
The EIA raised its forecast for U.S. natural gas consumption growth this year, expecting average demand to rise 2 percent from 2010 levels to about 67.43 bcf per day, more than its previous estimate of 67.06 bcf daily. Strong growth in the industrial and electric power sectors should back 2011 gains.
But in 2012, the EIA sees total demand falling 0.2 percent to 67.32 bcf daily, as declines in residential and commercial consumption due to milder winter weather in the Midwest and West offset continued growth in industrial and power sector use.
The EIA's 2012 demand estimate was up from its previous estimate of 67.24 bcf per day.
The agency recently said changes to its methodology in collecting and reporting consumption data should not significantly change reported total annual consumption volumes, but it did expect significant changes in the seasonality of reported residential and commercial demand volumes.
U.S. imports of liquefied natural gas are expected to fall nearly 17 percent from 1.2 bcfd in 2010 to 1 bcfd in 2011 and 2012, as increased demand in quake-hit Japan boosts LNG prices, the EIA said. The forecast is unchanged from last month's report. (Reporting by Joe Silha; Editing by Lisa Shumaker)