EIA Raises US Gas Output Forecasts
The US Energy Information Administration (EIA) has raised its forecasts for US gas production to 98.3bn ft3/day in 2021 and 98.9bn ft3/d in 2022 in its latest monthly outlook report, up 2.4bn ft3/d and 1.3bn ft3/d respectively from its January estimates.
The EIA said it now expected more associated gas production from Permian oilfields. It has lifted forecast for national output in the first quarter by 3.6bn ft3/d to 98.68bn ft3/d and for the second quarter by 2.74bn ft3/d to 97.95bn ft3/d.
Henry Hub spot prices are set to average $2.95/mn Btu in 2021, up from $2.03/mn Btu in 2020. Continued growth in LNG exports and in domestic consumption outside the power sector, as well as relatively flat production, will result in Henry Hub prices reaching a $3.27/mn Btu average in 2022.
The agency lowered its price forecast for the first quarter by $0.16 to $2.85/mn Btu, however, and its second-quarter prediction by $0.08 to $2.88/mn Btu. But it said that "more recent forecasts for mid-February weather show cold temperatures could extend across much of the US, which creates an upside risk to near-term prices in this outlook."
Gas use in power generation will come 1.43 trillion kWh in 2021 and 1.397 trillion kWh in 2022, the EIA said, up 3% and 5% respectively from its January forecasts.
"The higher forecast reflects lower regional natural gas price assumptions in the EIA's electricity generation model," it said. "The lower prices also reduce coal use for power generation in the forecast."
Coal-fired power generation will come to 835bn kWh in 2021 and 888bn kWh in 2022, down 4% and 7% respectively.