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					    Natural Gas Update:
            EIA
      NARUC Winter Meeting

              February 23, 2003

Barbara Mariner-Volpe,
Barbara.MarinerVolpe@eia.doe.gov
Energy Information Administration
       Presentation Outline
• Changes in EIA’s electricity data
• Natural Gas Storage
• Current Gas Prices
• Retail Restructuring Update
• Natural Gas Outlook: Short Term,
  Long Term
• EIA’s 2003 Natural Gas Agenda
Changes in EIA’s Reporting of
      Electricity Data
       Electric Power Sector
        Reporting by EIA
• Improves data accuracy.
• Relies on reports of electric generators
  instead of energy transporters.
• Reporting based on principle line of
  business.
• Data displays in all EIA products will be
  consistent.
• Staged implementation: Annual products
  first, then monthly products.
EIA’s reporting of electricity data

• Electricity-only and Combined-heat-and-
  power plants instead of utility/nonutility
  split
• Consumption by independent power
  producers reported in electric power
  sector instead of the industrial sector.
• Lag between AER and other annuals and
  monthlies
Natural Gas Industrial Sector Example
               (Old)
 • Combined heat and power plants associated
   with manufacturers--included

 • Independent power producers (IPPs)--
   included

 • Source of data on independent power
   producers differs in natural gas and electric
   power tabulations
Natural Gas Industrial Sector Example
               (New)
 • Combined heat and power plants
   associated with manufacturers--
   included and shown separately
 • Independent power producers (IPPs)--
   excluded
 • Source of data on independent power
   producers is the same in natural gas
   and electric power tabulations
          Revisions to 2000 Estimates
                                                             Percent
               Item                   AER 2000   AER 2001   Difference
Electricity Net Generation (Billion    3,792      3,801        0.3
Kilowatthours)
Natural Gas Consumption (Trillion      22.71      23.46        3.3
Cubic Feet)
Coal Consumption (Million Short        1,079.7    1,084.1      0.4
Tons)
Petroleum Consumption (Million         19.48      19.70        1.1
Barrels Per Day)
Renewable Energy Consumption           6,823      6.465        -5.2
(Trillion Btu)
                           Impact of Revisions to Nonutility
                                    Electric Data
                                          Total Natural Gas Consumption
                      25
                               AER 2000        AER 2001


                      20
Trillion Cubic Feet




                      15


                      10



                       5



                       0
                                1998                      1999            2000

                                                          Year
 Natural Gas Storage
• Weekly Storage Survey
• Current Stock levels
Weekly Natural Gas Storage Report
         0.2
         0.4
         0.6
         0.8
         1.2
         1.4




           0
           1
  5/9/2002
 5/23/2002
  6/6/2002
 6/20/2002

               10 weeks
  7/4/2002
             5 revisions in

 7/18/2002
  8/1/2002
 8/15/2002
 8/29/2002
 9/12/2002

 9/26/2002
10/10/2002
10/24/2002
                                                                                                        Frequent




 11/7/2002
11/21/2002
 12/5/2002
                 2 revisions in 30 weeks
                                           Bars denote weeks in which a revision occurred




12/19/2002
  1/2/2003
 1/16/2003
 1/30/2003
                                                                                            Revisions Have Become Much Less
     Very Low Storage Stocks Expected
at the End of the 2002/2003 Heating Season
                                     U.S. stocks as of Nov 1 and Heating Season Withdrawals
                                     3,500                                 Net Withdrawals


                                     3,000
                                                                                                                              Estimated Drawdown for
  Working Gas (Billion Cubic Feet)




                                                                                                                              February and March 2003
                                     2,500


                                     2,000                                                                                    Withdrawn from Storage
                                                                                                                               Through Jan. 31, 2003
                                     1,500


                                     1,000

                                                                                                                                  Estimated Gas
                                      500                                                                                        in Storage as of
                                                                    End of Season Gas in Storage                                  March 31, 2003
                                        0
                                             1995-96   1996-97   1997-98    1998-99   1999-00   2000-01   2001-02   2002-03

                                                                           Heating Season
 Storage Stocks in the East and Producing
Regions are Expected to be in the low range
          by end of winter 2003
                        Working Gas in the Total US Compared with 5-Year                                                    Working Gas in the East Compared with 5-Year Range
                                             Range




                                                                                                                   Billion Cubic Feet
                                                                                                                                        2,500
  Billion Cubic Feet




                         4,000
                                                                                                                                        2,000
                         3,000
                                                                                                                                        1,500
                         2,000                                                                                                          1,000
                         1,000                                                                                                            500
                             0                                                                                                              0




                                                                                                                                                                                    May-01




                                                                                                                                                                                                                                      May-02
                                                                                                                                                    Nov-00




                                                                                                                                                                                                  Aug-01

                                                                                                                                                                                                               Nov-01




                                                                                                                                                                                                                                                Aug-02

                                                                                                                                                                                                                                                          Nov-02
                                                   May-01




                                                                                       May-02




                                                                                                                                                                      Feb-01




                                                                                                                                                                                                                           Feb-02
                                 Nov-00




                                                            Aug-01

                                                                     Nov-01




                                                                                                Aug-02

                                                                                                         Nov-02
                                          Feb-01




                                                                              Feb-02




                   Working Gas in the Producing Areas Compared with                                                 Working Gas in the West Compared with 5-Year Range
                                      5-Year Range
   Billion Cubic Feet




                    1,000                                                                                            500

                                                                                                                  Billion Cubic Feet
                      800                                                                                            400
                      600                                                                                            300
                      400                                                                                            200
                      200                                                                                            100
                        0                                                                                              0
                                                   May-01




                                                                                       May-02




                                                                                                                                                                               May-01




                                                                                                                                                                                                                                    May-02
                                 Nov-00




                                                            Aug-01

                                                                     Nov-01




                                                                                                Aug-02

                                                                                                         Nov-02




                                                                                                                                           Nov-00




                                                                                                                                                                                             Aug-01

                                                                                                                                                                                                           Nov-01




                                                                                                                                                                                                                                               Aug-02

                                                                                                                                                                                                                                                         Nov-02
                                          Feb-01




                                                                              Feb-02




                                                                                                                                                             Feb-01




                                                                                                                                                                                                                        Feb-02
NYMEX Natural Gas Futures Near-Month Contract Settlement
  Price, West Texas Intermediate Crude Oil Spot Price, and
             Henry Hub Natural Gas Spot Price
                             $7

                             $6                                                 WTI
   Dollars per Million Btu




                             $5

                             $4

                             $3                                                                                                                            Gas Spot Price,
                                                                                                                                                           Gas Futures Price
                             $2
                                                        NYMEX Natural Gas Settlement Price                                  WTI Spot Price                         Henry Hub Spot Price
                             $1

                             $0
                                  1/1/2002


                                             2/1/2002


                                                          3/1/2002


                                                                     4/1/2002


                                                                                5/1/2002


                                                                                           6/1/2002


                                                                                                      7/1/2002


                                                                                                                 8/1/2002


                                                                                                                                9/1/2002




                                                                                                                                                                                   1/1/2003


                                                                                                                                                                                              2/1/2003
                                                                                                                                           10/1/2002


                                                                                                                                                       11/1/2002


                                                                                                                                                                       12/1/2002
   Note:The West Texas Intermediate crude oil price, in dollars per barrel, is converted to $/MMBtu using a
   conversion factor of 5.80 MMBtu per barrel. The dates marked by vertical lines are the NYMEX near-month contract
   settlement dates. Source: NGI's Daily Gas Price Index (http://Intelligencepress.com)
Why Are Natural Gas Prices High?
• Weather: Temps. avg 5% below normal
  (13% less than year ago)
• Storage: 3,116 bcf at start of winter (4%
  above 5-yr avg. High demand has led to
  record drawdown (as of 2/14 stocks 27%
  below 5-yr avg)
• Production: ’02 production (through Oct.)
  down about 2.6 percent from ’01 level
• Net imports: (thru Oct ’02) down 4 percent
  from ’01 level
Status of Residential Choice
          Programs
As of January 2003, Twenty-One States and the
   District of Columbia Have Some Form of
          Residential Choice Program
Overall nearly 7 percent (4.1 million) of
 U.S. residential gas customers (60.2
million) are buying gas from marketers
   GA has most extensive program. 1.4 million
    residentials, (82 % of state total) must
    choose.
   OH has about 1 million customers
    participating (33 % of state total)
  • MI has 332,000 (11 % of state total)
  • NY has 319,000 (7.5 % of state total).
Some states fine-tuned existing programs
                 in 2002
   • More stringent marketer certification
     standards – IL, OH, NY

    Improved consumer protection
     measures – GA, NY, OH
Enrollment in existing programs
  generally increased in 2002

• Number of eligible customers increased
• Programs expanded
• Eligibility numbers doubled in MI, nearly
  tripled in VA, increased more than five-
  fold in WY and nearly seven-fold in IL
• Number of competitive suppliers increased
Short-Term Outlook for
      Natural Gas
Under Base Case assumptions, EIA expects prices to
            exceed $4 through 2004
    (Base Case and 95% Confidence Interval)
                            10.0
  Dollars per Thousand Cubic Feet




                                    9.0
                                                                                                                           Projections
                                    8.0
                                    7.0
                                    6.0
                                    5.0
                                    4.0
                                    3.0
                                    2.0
                                    1.0
                                    0.0
                                                                     Oct-01




                                                                                                         Oct-02




                                                                                                                                              Oct-03




                                                                                                                                                                                  Oct-04
                                                   Apr-01




                                                                                       Apr-02




                                                                                                                            Apr-03




                                                                                                                                                                Apr-04
                                                            Jul-01




                                                                                                Jul-02




                                                                                                                                     Jul-03




                                                                                                                                                                         Jul-04
                                          Jan-01




                                                                              Jan-02




                                                                                                                  Jan-03




                                                                                                                                                       Jan-04
                                                                                                         Monthly
                                               Sources: History: Natural Gas Week; Projections: Short-Term Energy Outlook, February 2003.
                 Total Natural Gas Demand Growth Patterns
                 10%                                                                                                        100
                               History                                                                      Proj.
                 8%                                                                                                         90

                                                                                                                            80
                 6%




                                                                                                                                  Billion Cubic Feet per Day
                                                                                                                            70
                 4%
Percent Change




                                                                                                                            60
                 2%
                                                                                                                            50
                 0%
                                                                                                                            40
                 -2%
                                                                                                                            30
                 -4%
                                                                                                                            20

                 -6%                                                                                                        10

                 -8%                                                                                                        0
                       1991   1992   1993   1994   1995   1996   1997   1998   1999   2000    2001   2002   2003     2004

                                      Percent Change (Left Axis)                   Total (Right Axis)
                                     Sources: History: EIA; Projections: Short-Term Energy Outlook, February 2003.
                      Working Gas in Storage
             (Difference from Previous 5-Year Average)
          60%
                                     History                                                                   Projections
          50%
          40%
          30%
          20%
          10%
Percent




           0%
          -10%
          -20%
          -30%
          -40%
          -50%
          -60%
                                                              Nov-02




                                                                                                                    Nov-03




                                                                                                                                                                          Nov-04
                                            Jul-02




                                                                                                  Jul-03




                                                                                                                                                        Jul-04
                 Jan-02




                                                     Sep-02




                                                                       Jan-03




                                                                                                           Sep-03




                                                                                                                             Jan-04




                                                                                                                                                                 Sep-04
                                   May-02




                                                                                         May-03




                                                                                                                                               May-04
                          Mar-02




                                                                                Mar-03




                                                                                                                                      Mar-04
                                                                                         Monthly
                                            Sources: History: EIA; Projections: Short-Term Energy Outlook, February 2003.
Long-Term Outlook for Natural
           Gas
Natural Gas Supply, Consumption, and Imports,
         1970-2025 (trillion cubic feet)
35                   History                       Projections
                                                                     Net
30                                                                 Imports

25                         Consumption
                                                      Production
20
                                           Natural Gas Net Imports, 2001, 2025
                                                    (trillion cubic feet)
15                                         6
                                           5                         2001
10                                         4                         2025
                                           3
        Source: AEO 2003
                                           2
5                                          1
                                           0     Pipeline Liquefied Natural Gas
0
     1970     1980         1990     2000         2010                2025
         Long-term Outlook
    for the Natural Gas Market
• U.S. gas demand is projected to grow 54% by 2025, to
  35 Tcf
• Prices will increase slowly to about $3.90 (2001
  dollars/mcf) in 2025 ($7.06 in nominal dollars)
• Imports increase to about 7.8 Tcf by 2025 (including 2.1
  Tcf of LNG imports)
• Rising prices and technology improvements increase
  reserve additions and production
• Alaskan Pipeline expected to start service in 2021
EIA has Revised the Natural Gas Program to Provide
       Additional, More Useful Information
   • Strategic Information Planning
   • Short-term market forecast
   • Weekly Market Update
   • New surveys: Weekly Storage, Marketer
   • New recurring reports and special reports
   • Revising way EIA presents electricity data
   • New query system for annual, non-confidential
     company data
   • Natural gas data quality initiative
   EIA’S NATURAL GAS
PRODUCTS and 2003 AGENDA
        EIA Natural Gas Products
• Weekly Market Update, Storage Report, ESAR
• New surveys: Weekly Storage, Marketer
• New recurring reports and special reports:
  productive capacity report (released soon), LNG,
  derivatives
• Revising presentation of electricity data
• Improved access to non-confidential company data
• Natural gas data quality initiative: ongoing
New Natural Gas Data Requirements
• Marketer sales data in States with active
  customer choice programs
• More timely data with weekly
  underground storage estimates
• Bringing EIA sector definitions in line
  with industry record keeping practices
• More frequent frames updating
• LNG and improved production data

				
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