May 8, 2012 / 5:05 PM / 8 years ago

UPDATE 1-US trims natgas output growth view, lifts demand

* EIA sees demand growing 3.4 bcfd, or 5.1 pct, in 2012

* EIA slightly trims gas production growth, still seen at record (New throughout, adds consumption, LNG and price data, background)

By Joe Silha

NEW YORK, May 8 (Reuters) - The U.S. Energy Information Administration o n T uesday trimmed its estimate for domestic natural gas production growth in 2012, but sharply raised its expectation for demand gains this year.

In its May Short-Term Energy Outlook, the EIA said it expected marketed natural gas production in 2012 to rise by 2.9 billion cubic feet per day, or 4.4 percent, to 69.14 bcfd, still a record high but slightly below its April outlook that had output this year at 69.22 bcfd.

EIA, expecting low prices to reduce new drilling, sees production next year increasing by only 0.16 bcfd, or 0.2 percent, to 69.3 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.

The agency significantly raised its estimate for consumption this year, expecting demand to climb 3.4 bcfd, or 5.1 percent, from 2011 to 70.17 bcf daily. EIA’s previous estimate showed total demand in 2012 averaging 69.6 bcfd.

EIA said it expects electric power demand for gas to jump 21 percent this year, primarily driven by utilities switching from coal to cheaper gas to generate power. Residential and commercial use were expected to decline in 2012, as weather this year falls short of some of last year’s extremes.

Liquefied natural gas imports are expected to fall by 0.3 bcfd, or 32 percent, to about 0.7 bcfd in 2012. Imports will likely come in the form of contractual cargoes to the Everett terminal in Boston and the Elba Island terminal in Georgia, the EIA said.

EIA expects Henry Hub natural gas prices NG-W-HH in 2012 to average $2.45 per million British thermal units, down slightly from last month’s estimate of $2.51 but nearly 39 percent below 2011’s estimated average of $4.

In 2013, EIA sees prices rising 72 cents, or 29 percent, to $3.17 per mmBtu. (Additional reporting by Eileen Houlihan; Editing by Marguerita Choy and David Gregorio)

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