(Reuters) - U.S. natural gas production and demand will drop in 2020 and 2021 from record highs in 2019 as government steps to slow the spread of the coronavirus cut economic activity and energy prices, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday.
EIA projected dry gas production will drop to 91.70 billion cubic feet per day (bcfd) in 2020 and 87.48 bcfd in 2021 from a record 92.19 bcfd in 2019.
That would be the first annual production decline since 2016 and the first time output falls for two consecutive years since 2005.
The expected 4.2 bcfd production plunge in 2021 would be the biggest year-over-year fall since output dropped 4.7 bcfd in 1983.
EIA also projected U.S. gas consumption would fall to 83.79 bcfd in 2020 and 81.24 bcfd in 2021 from a record 84.97 bcfd in 2019.
That would be the first annual decline in consumption since 2017 and the first time demand falls for two consecutive years since 2006.
The expected 2.6 bcfd usage plunge in 2021 would be the biggest year-over-year fall since demand dropped 3.1 bcfd in 2001.
EIA’s gas supply and demand projections for 2020 in April were much lower than its March forecasts of 95.3 bcfd for output and 87.3 bcfd for consumption.
In April, the agency forecast net gas exports would reach 7.8 bcfd in 2020 and 8.2 bcfd in 2021, up from 5.2 bcfd in 2019. That compares with EIA’s March projections of 7.2 bcfd in 2020 and 8.9 bcfd in 2021.
EIA said gas’ share of power generation will rise from 37% in 2019 to 39% in 2020 before easing to 35% in 2021 as gas prices increase, while coal’s share will slide from 24% in 2019 to 20% in 2020 before rising to 23% in 2021.
Nuclear’s share of power generation will rise from 20% in 2019 to 21% in 2020 - topping coal for the first time - before easing back to 20% in 2021, while renewables’ share will rise from 17% in 2019 to 20% in 2020 and 21% in 2021 - topping nuclear for the first time.
EIA projected carbon emissions from burning fossil fuels will fall from 5.138 billion tonnes in 2019 to 4.755 billion tonnes in 2020, the lowest since 1985, before rising to 4.925 billion tonnes in 2021 when the power sector is expected to burn more coal.
Reporting by Scott DiSavino in New York; Editing by Chris Reese and Matthew Lewis
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