February 7, 2012 / 5:55 PM / 8 years ago

UPDATE 1-EIA sees 2012 US gas production up 2.3 pct from 2011

* EIA sees 2012 gas output at record-high 67.64 bcfd

* 2012 gas demand seen up 1.6 bcfd (2.3 pct) from 2011 (Adds consumption, LNG and price data, background)

NEW YORK, Feb 7 (Reuters) - The U.S. Energy Information Administration on Tuesday slightly raised its estimate for domestic natural gas production growth in 2012, expecting output this year to be up 2.3 percent from 2011’s record levels.

In its February Short-Term Energy Outlook, the EIA said it expected marketed natural gas production in 2012 to rise by 1.5 billion cubic feet per day (bcfd) to a record 67.64 bcfd, up from its January outlook that had output this year at 67.34 bcf daily.

The EIA said marketed production grew by 4.8 bcfd, or 7.8 percent, in 2011 to a record high 66.15 bcfd. The gain last year, the largest year-over-year increase in history, easily eclipsed the previous record of 62.05 bcfd hit in 1973.

EIA sees production next year growing by another 0.88 bcfd, or 1.3 percent, to 68.52 bcfd.

Declines in production have not accompanied declines in the rig count, partly reflecting improving drilling efficiency.

That fact, combined with high initial production rates from new wells, associated natural gas production from oil drilling, and a backlog of uncompleted or unconnected wells contributed to EIA’s forecast of further production increases in 2012 and 2013.

But EIA said it expects relatively low gas prices to slow output gains both this year and next year.

The agency also slightly raised its estimate for consumption this year, expecting demand to climb 1.6 bcfd, or 2.3 percent, from 2011 to 68.48 bcf daily.

The largest demand increase this year is expected to come from the electric power sector as gas remains a relatively inexpensive option for generators.

Liquefied natural gas (LNG) imports are expected to decline by 28 percent this year, or 0.3 bcf per day to 0.7 bcfd, the EIA said. Imports are projected to remain steady in 2013.

The EIA expects Henry Hub natural gas prices NG-W-HH in 2012 to average $3.35 per million British thermal units, down 5 percent from last month’s outlook and about 16 percent below 2011’s estimated average of $4.

In 2013, the EIA sees prices rising 72 cents, or 21 percent, to $4.07 per mmBtu. (Reporting by Joe Silha; Additional reporting by Ed McAllister in New York; Editing by Lisa Shumaker)

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