US natural gas consumption will continue to increase

U.S. natural gas consumption is expected to increase slightly through 2020, according to the Energy Information Administration’s 2019 Short-Term Energy Outlook (STEO).

The outlook expects several natural gas market trends to continue into 2019 and 2020, including relatively stable Henry Hub natural gas prices and increasing natural gas production and exports. It also says that increases in the electric and industrial sectors are offsetting decreases in the residential and commercial sectors.

The STEO forecast shows that U.S. natural gas consumption will remain relatively, increasing a projected 1.3 percent in 2019 and 1.1 percent in 2020 to a total of 83.6 Bcf/d in 2020. Natural gas consumption is projected to decrease slightly in the residential and commercial sectors. This is due to expected milder weather, which will require less energy for space heating in the winter and air conditioning in the summer. Decreases in those sectors will be offset by increased consumption in both the electric power and industrial sectors.

EIA expects the U.S. benchmark Henry Hub natural gas spot price to average $2.89 per million British thermal units (MMBtu) in 2019 and $2.92/MMBtu in 2020. That’s about 25 cents lower than the 2018 average of $3.15/MMBtu. Prices in the forecast are expected to be comparable with recent years as production growth largely keeps pace with demand and export growth.

Further, the EIA report expects record-high dry U.S. natural gas production to continue to grow through 2020, from an estimated 83.3 billion cubic feet per day (Bcf/d) in 2018 to 90.2 Bcf/d in 2019 and 92.2 Bcf/d in 2020. Most supply will come from the Appalachian Basin in the Northeast, followed by the Permian Basin in western Texas and eastern New Mexico and the Haynesville shale formation in eastern Texas.

In 2019, natural gas planned capacity additions will total 7.5 gigawatts (GW) in the United States, while 4.5 GW of coal-fired capacity will be taken offline. Natural gas will continue as the primary source of U.S. electricity generation, increasing from 35 percent in 2018 to 37 percent in 2020. Further, coal-fired electricity generation will fall from 28 percent in 2018 to 24 percent in 2020.

Finally, EIA expects that the United States will continue to export more natural gas than it imports during the coming years as production continues to outpace domestic consumption.