US dry natural gas production is on pace to break records in 2018 and 2019, the US Energy Information Administration said in its April short-term energy outlook, even as the agency trimmed its natural gas production estimates for the second quarter and full year 2018.
EIA also sees US natural gas consumption rising over the next two years, with power generation use serving as the leading driver. "This year's [dry gas] production is poised to increase by 7.5 Bcf/d over 2017 levels to an average just above 81 Bcf/d day," EIA Administrator Linda Capuano said Tuesday.
The April outlook lowered by 1.15 Bcf/d to 86.51 Bcf/d the natural gas marketed production estimate for the US in the second quarter, and lowered the Q3 production forecast by 0.33 Bcf/d to 88.22 Bcf/d. The full-year forecast for 2018 dropped by 0.80 Bcf/d to 87.03 Bcf/d.
Nonetheless, total marketed production was seen rising to 87.03 Bcf/d in 2018 and 89.08 Bcf/d in 2019, from 78.93 Bcf/d in 2017, according to the April report. EXPORTS, CONSUMPTION ON THE RISE
Overall, EIA expects US natural gas consumption to rise by 4.2 Bcf/d (5.7%) in 2018 and by 0.7 Bcf/d (0.9%) in 2019.
EIA lowered its natural gas consumption estimates by 0.10 Bcf/d to 69.77 Bcf/d for Q3. It raised the consumption estimate for the full year 2018 by 0.26 Bcf/d to 78.45 Bcf/d.
Exports are seen rising to historic levels in 2018 and 2019.
"US natural gas trade was almost balanced between exports and imports in 2017, but in this forecast, EIA expects that the United States will see net natural gas exports climb above 4 Bcf/d by 2019 as LNG terminals continue to come online," Capuano said. Net natural gas exports are forecast to rise from 0.4 Bcf/d in 2017 to an annual average of 2.2 Bcf/d in 2018, before doubling, 4.4 Bcf/d in 2019. Henry Hub price forecasts saw little change from the prior outlook. The agency raised its forecast for Q2 Henry Hub natural gas spot prices by 1 cent to $2.82/MMBtu. The agency's forecast was flat from the previous month's outlook for Q3 as well as the full year 2018 and 2019. EIA projected Henry Hub natural gas prices would average $2.99/MMBtu for full year 2018 and $3.07/MMBtu in 2019, compared with the 2017 average of $2.99/MMBtu.
GAS GROWS IN FUEL MIX DURING SUMMER MONTHS
On the power said, EIA continued to see natural gas gaining in the share of electricity generation.
"With a warmer summer expected in 2018, EIA expects electric generation from June through August to top last year's levels by more than 2%," Capuano said. "Of total electrical generation over the summer, natural gas will account for 36%, 2% higher than last year, while coal's share will drop by 2% to 30%."
Wind is also rising in the power mix for 2018 and 2019 and could pass hydropower in the latter year.
"Assuming that precipitation and snowpack levels are consistent with forecasts, wind will -- for the first time -- overtake hydropower generation in 2019. As greater capacity comes online, wind has the potential to become the nation's largest renewable source," she said.
The share made up by hydropower was about 7% in 2017 and was expected to drop below that in 2018 and 2019.
