The U.S. Natural Gas Market in Focus

Transcription

1 The U.S. Natural Gas Market in Focus Current and Projected Supply and Demand Conditions for Flame 212 April 17, 212 Amsterdam, The Netherlands by Howard Gruenspecht, Acting Administrator U.S. Energy Information Administration Independent Statistics & Analysis

2 U.S. natural gas storage has reached an unprecedented high for this time of year Working Gas in Underground Storage Compared with 5-Year Range Billion Cubic Meters Billion Cubic Feet 4, 3,6 3,2 2,8 2,4 2, 1,6 1, Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Source: EIA Weekly Natural Gas Storage Report as of April 6, 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 2

3 U.S. natural gas spot prices are very low compared to prices in other regions and oil prices Global spot natural gas and crude oil prices with average monthly LNG prices in Japan U.S. dollars per million British thermal unit U.S. - Henry Hub Japan - LNG France - PEG Canada - AECO Germany - BEB Hub Netherlands - TTF Belgium - Zeebrugge Brent crude oil UK - NBP Sources: EIA, Bloomberg, as of April 1, 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 3

4 Total marketed production (line chart) 7 U.S. Natural Gas Production and Imports (billion cubic feet per day) Change from prior year (column chart) Net imports (right axis) Federal Gulf of Mexico production (right axis) U.S. production excluding Gulf of Mexico (right axis) Total marketed production (left axis) Marketed production forecast (left axis) Source: Short-Term Energy Outlook, April 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 4

5 Total consumption (line chart) Electric power (right axis) Industrial (right axis) U.S. Natural Gas Consumption (billion cubic feet per day) Total consumption (left axis) Residential and commercial (right axis) Other (right axis) Consumption forecast (left axis) Change from prior year (column chart) Source: Short-Term Energy Outlook, April 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 5

6 U.S. Working Natural Gas in Storage billion cubic feet 4, 3, 2, 1, -1, -2, Storage level Deviation from average Forecast -3, Jan 28 Jan 29 Jan 21 Jan 211 Jan 212 Jan % 17% 16% 15% 14% 13% 12% 11% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % -1% -2% Note: Colored band around storage levels represents the range between the minimum and maximum from Jan Dec Source: Short-Term Energy Outlook, April 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 6

7 Henry Hub Natural Gas Price dollars per million Btu 1 Historical spot price STEO price forecast 8 NYMEX futures price 95% NYMEX futures price upper confidence interval 95% NYMEX futures price lower confidence interval Jan 211 Jul 211 Jan 212 Jul 212 Jan 213 Jul 213 Note: Confidence interval derived from options market information for the 5 trading days ending April 5, 212 Intervals not calculated for months with sparse trading in "near-the-money" options contracts Source: Short-Term Energy Outlook, April 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 7

8 Foreign joint venture investment in U.S. shale gas and tight oil plays Foreign Domestic Amount Partner Country Partner Shale Play ($B) Year British Petroleum UK Chesapeake Woodford British Gas UK EXCO Marcellus StatoilHydro Norway Chesapeake Marcellus Reliance India Pioneer Eagle Ford Reliance India Atlas Marcellus Reliance India Carrizo Marcellus Total France Chesapeake Barnett CNOOC China Chesapeake Niobrara British Gas UK EXCO Haynesville Mitsui Japan Anadarko Marcellus CNOOC China Chesapeake Eagle Ford KNOC Korea Anadarko Eagle Ford Marubeni Japan Marathon Niobrara Mitsui Japan SM Energy Eagle Ford GAIL India Carrizo Eagle Ford Total France Chesapeake/EnerVest Utica Sinopec China Devon TMS, Niobrara,Utica Marubeni Japan Hunt Oil Eagle Ford Total Source: EIA, from trade press reports as of 27 February 212 Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 8

9 Technically recoverable natural gas resources reflect updated assessments U.S. dry gas resources trillion cubic feet Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations) 2, , AEO Edition *Alaska resource estimates prior to AEO29 reflect resources from the North Slope that were not included in previously published documentation. Source: EIA, Annual Energy Outlook Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 9

10 The average delivered price of coal to electricity generators varies widely across U.S. regions transport costs are a key reason 21 Delivered coal prices, $ per million Btu $3.41 $2.2 $2.1 $2.96 $1.51 $1.49 N/A N/A 1.77 $1.57 $1.46 $1.75 $2.48 $2.91 $1.93 $1.83 $1.83 $2.45 $3.4 $3.65 National Average Minimum Maximum $2.25 $1.46 $4.46 $1.91 $4.46 Source: EIA, Annual Energy Outlook 212 Early Release Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17, 212 1

11 Natural gas consumption is quite dispersed; electric power and industrial use drives much of the future demand growth U.S. dry gas consumption trillion cubic feet per year 3 History Projections % 34% Electric power % 13% 3% 21% *Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel. Source: EIA, Annual Energy Outlook 212 Early Release 32% 13% 3% 18% Industrial* Commercial Transportation** Residential Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,

12 Electricity mix gradually shifts to lower-carbon options, led by growth in renewables and natural gas electricity net generation trillion kilowatthours per year 6 History 21 Projections % 1% Natural gas Renewables 27% 16% 2 45% Coal 39% 1 Oil and other liquids 2% Nuclear 18% 1% 1% Source: EIA, Annual Energy Outlook 212 Early Release Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,

13 Shale gas offsets declines in other U.S. natural gas production sources U.S. dry gas production trillion cubic feet per year 3 History 21 Projections % Shale gas 49% 15 26% Tight gas 21% 1 9% Non-associated offshore 2% 9% Coalbed methane 7% 1% 5 Associated with oil Alaska 1% 7% 7% 21% Non-associated onshore 9% Source: EIA, Annual Energy Outlook 212 Early Release Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,

14 Oil to natural gas price ratio remains high over the projection ratio of oil price to natural gas price History 5 29 Projections Oil and natural gas prices 21 dollars per million Btu History 29 Projections Crude oil (foreign low sulfur light) U.S. Natural gas at Henry hub Source: EIA, Annual Energy Outlook 212 Reference Case Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,

15 Domestic natural gas production grows faster than consumption U.S. dry gas trillion cubic feet per year 3 History 21 Projections Consumption Domestic supply 1 5 Net imports Source: EIA, Annual Energy Outlook 212 Early Release Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,

16 For more information U.S. Energy Information Administration home page Short-Term Energy Outlook Annual Energy Outlook International Energy Outlook Monthly Energy Review EIA Information Center Our average response time is within three business days. (22) hour automated information line about EIA and frequently asked questions. Flame - The U.S. Natural Gas Market in Focus, Howard Gruenspecht, April 17,