June 12, 2012 / 5:04 PM / 7 years ago

UPDATE 1-EIA trims 2012 US natgas output, demand growth estimates

(Adds consumption, inventory, LNG and price data, background)

NEW YORK, June 12 (Reuters) - The U.S. Energy Information Administration on Tuesday lowered its estimate for domestic natural gas production growth in 2012 for a second straight month but still expects output this year to be up 3.4 percent from 2011’s record levels.

In its June Short-Term Energy Outlook, EIA said it expected marketed natural gas production in 2012 to rise by 2.25 billion cubic feet per day to 68.47 bcfd, still a record high but below its May outlook that had output this year at 69.14 bcfd.

Declining production from less profitable dry gas plays like Haynesville in Louisiana will be offset by growth in liquids-rich areas like Eagle Ford in Texas and Marcellus in Appalachia, as well as associated gas from rising domestic crude production.

EIA, expecting low prices to reduce new drilling, sees production growth slowing next year, gaining just 1.2 bcfd, or 1.7 percent, to 69.65 bcfd.

EIA also trimmed its estimate for consumption growth this year to reflect a decline in total projected heating degree days. But the agency still expects demand to climb 2.7 bcfd, or 4.1 percent, from 2011 to 69.46 bcf daily. EIA’s previous estimate showed total demand in 2012 averaging 70.17 bcfd.

EIA said it expects electric power demand for gas to jump 20 percent this year, driven primarily by utilities switching from coal to cheaper gas to generate power. Gains in the electric power sector were expected to offset declines in residential and commercial use.

Gas inventories are expected to climb to a new record high of 4.015 trillion cubic feet by the end of October 2012, just shy of the government’s 4.1 tcf estimate of total storage capacity. EIA’s previous estimate in May was 4.096 tcf.

EIA’s forecast for liquefied natural gas imports remained unchanged at 0.7 bcf per day for 2012, a 33 percent fall from last year, with low domestic prices expected to deter imports. Imports in 2013 are expected to be flat with 2012.

EIA expects Henry Hub natural gas prices NG-W-HH in 2012 to average $2.55 per million British thermal units, up 10 cents from last month’s estimate but about 36 percent below 2011’s estimated average of $4.

In 2013, EIA sees prices rising 68 cents, or 27 percent, to $3.23 per mmBtu. (Reporting By Joe Silha. Additional reporting by Edward McAllister; Editing by Bob Burgdorfer and Gunna Dickson)

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