Natural Gas Update by po2933

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									Natural Gas Update
Natural Gas Staff Subcommittee NARUC Winter Meeting
February 15, 2009 Washington, D.C.

Barbara Mariner-Volpe, Energy Information Administration (EIA) Barbara.MarinerVolpe@eia.doe.gov

www.eia.doe.gov

Topics
• Selected Trends and Short-Term Outlook • Long-Term Outlook • EIA’s Natural Gas Agenda

US Reserves of Natural Gas Reached a 30-Year High in 2007
300

1977 EIA's First Proved Reserves Report
250

2007 30-Year High, 238 Tcf Largest 1-Year Increase
More than 45%growth from 1993 Low

207 Trillion Cubic Feet
200

TCF

150

100

50

0 1977 1982 1987 1992 1997 2002 2007

Year

Since 1996 Reserve Additions Have Exceeded Production for All Years but One
250%
Percent of U.S. Gas Production Replaced

237%

200%
164% 152%

150%
118% 107% 104%

131% 118% 111% 118%

136%

100%

83%

50%

0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Energy Information Administration, U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves 2007 Annual Report

Producers Have Responded to Recent Price Decreases By Reducing Drilling
$16

1800
Number of Rigs Drilling for Natural Gas

Price (Dollars per MMBtu)

$14 $12 $10 $8 $6 $4 $2 $0

1600 1200 1000 800 600
Decrease in price and drilling

400 200 0

Weekly Henry Hub Spot Price
Aug-99 Nov-00 Sep-03 Jan-99 Dec-01 Dec-04 Jul-02 Jul-05 May-01 Feb-03 May-04 Mar-00 Mar-06

Source: Natural Gas Intelligence Weekly Gas Price Index, Baker-Hughes Weekly US Rig Report.

Aug-08

Oct-06

Jun-07

Jan-08

Number of Rigs

1400

Short-term Natural Gas Market Outlook

EIA’s Petroleum Price Outlooks Reflect Changes in Market Conditions
25.00 Dollars per MMBTU 20.00 15.00
Nov. 2008
EIA projection: July 2008

West Texas Intermediate Petroleum Price

Sept. 2008

10.00
Jan. 2008

5.00
Jul-08 Sep-08 Nov-08 Jan-09

0.00 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jul-10

EIA’s Natural Gas Price Outlooks Reflect Changes in Market Conditions
14.00 12.00 Dollars per MMBTU 10.00
Sept. 2008 Henry Hub spot price
Sept. 2008

EIA projection
July 2008

8.00 6.00 4.00 2.00 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jul-10

Nov. 2008

Jan. 2008

Natural Gas Spot Prices Are Expected to Remain Below West Texas Intermediate Crude Oil Prices Through 2010
Projections
Dollars per Million Btu $20 $15 $10 $5 $0 1/00 7/00 1/01 7/01 1/02 7/02 1/03 7/03 1/04 7/04 1/05 7/05 1/06 7/06 1/07 7/07 1/08 7/08 1/09 7/09 1/10 7/10
SPOT Prices Henry Hub WTI ($/mmBtu) 2008 $9.13 $17.17 2009 $5.01 $ 7.44 2009 $5.93 $ 9.40

WTI Crude Oil

Henry Hub Natural Gas

Sources: EIA Short Term Energy Outlook February 2009

Industrial Market recovery is not expected o until post 2010
1.5

Change in Natural Gas Consumption (trillion cubic feet)

1.0 0.5 0.0 -0.5 -1.0 -1.5

Consumption Total Tcf 2008 23.26 2009 22.89 2010 23.02

Daily Bcf/d 63.55 62.70 63.08

Projections

Annual Percent Change in Total Natural Gas Consumption

History

2008 2009 2010

1.25 -1.57 0.61

2004 Residential

2005

2006

2007 Industrial

2008

2009

2010 Total

Commercial

Electric Power*

Sources: 2004-2007: Natural Gas Annual 2007; Jan – Nov 2008: Natural Gas Monthly February 2009 Dec 2008 and Projections: Short-Term Energy Outlook, February 2009

Total Gas Production is Expected to Decrease in 2010
Projections

22 21 20 19 18 17 16 15 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
17.8 18.1 18.8 18.6 18.8 18.8 19.0 19.2 18.8 19.6 18.9 19.1 18.8 18.2

21.4 21.4

21.2

19.4 19.0

TCF

2007

2008

2009

Sources: EIA, Short-Term Energy Outlook, February 2009

2010

The Pace of LNG Imports Slowed Starting in 2007
120

Equatorial Guinea
100

Projection 2008 = 352 Bcf 2009 = 369 Bcf 2010 = 436 Bcf

East of Suez Bcf p er M o n th
80

Nigeria Egypt Algeria
Norway

60

40

20

Trinidad
0

Source: Energy Information Administration. History derived from Office of Fossil Energy data; Forecast: Short-Term Energy Outlook February 2009

U.S. Gasification Capacity is expected to increase through 2010
18 16 Billion Cubic Feet per Day 14 12 10 8 6 4 2 0
2003 2004 2005 2006 2007 2008 2009 2010
Northeast Gateway Existing Terminals Cameron LNG Sabine Pass LNG Freeport LNG

History

Projection Neptune Golden Pass

Source: Energy Information Administration

Imports and exports follow similar patterns, with both expected to decline in 2009 and rise in 2010
5,000
Projections

4,500 4,000 3,500 3,000 BCF 2,500 2,000 1,500 1,000 500 0
1996 1998 2000 2002 2004 2006 2008 2010

Imports
Notes: Includes LNG and pipeline volumes. Sources: EIA, Short-Term Energy Outlook, January 2009.

Exports

60,000

Additions to Pipeline and Storage Capacity Are Expected in the Short-Term
43,875

50,000

Million Cubic Feet per Day

40,000 35,444 31,018 30,000 23,571 20,000 12,705 10,000 8,198 14,859

Additions to Working Gas Capacity

4,800 4,600

4,570 4,412 4,208 4,010 4,056 4,098

0

4,400

2005

2006

2007

2008

2009

2010

2011

4,200 4,000

Additions to Interstate Pipeline Capacity

Bcf

3,800 3,600 3,400 3,200 3,000

2005

2006

2007

2008

2009

2010

Note: Only projects under construction or approved that were judged to have the most likelihood of being completed in 2009 were included in 2009. Source: Energy Information Administration, GasTran Natural Gas Transportation Information System, Natural Gas Pipeline Projects Database, as of January 2009.

Long-term Natural Gas Market Outlook

The economy, oil prices, resources, policies, and behavior drive EIA’s AEO2009 reference case outlook

• • • •

Long-term economic growth averages about 2.5 percent per year between 2007 and 2030 World crude oil prices recover from a near-term decline and reach $130 per barrel (in 2007 dollars) by 2030 A robust domestic natural gas resource base allows for a steady expansion of production given projected growth in demand and prices Recently-enacted policies and concerns over greenhouse gas (GHG) emissions, combined with high energy prices, moderate projected growth in energy consumption and emissions

Non-fossil energy use grows rapidly, but fossil fuels still provide 79 percent of total energy use in 2030
quadrillion Btu
120

History

Projections

100

Coal
80

Natural Gas
60

40

Liquid Fuels Liquid Biofuels

20

Renewables (excl liquid biofuels)
0 1980 1990 2000 2010

Nuclear
2020 2030

Source: Energy Information Administration, Annual Energy Outlook 2009

The import share of natural gas supply declines sharply as domestic supply grows
trillion cubic feet
30

History
25

Projections

Consumption
16%

3%

Net Imports

14%

20

Domestic supply
15

AEO2009 reference case AEO2008 reference case

10 1990 1995 2000 2005 2010 2015 2020 2025 2030

Source: Energy Information Administration, Annual Energy Outlook 2008 and 2009

Unconventional production meets most growth in natural gas demand and offsets the decline in conventional production and imports
trillion cubic feet

30
History Projections

25 20
Unconventional

15 10 5

Non-associated offshore Associated-dissolved Net imports Non-associated conventional Alaska

0 1990 1995 2000 2005 2010 2015 2020 2025 2030

Source: Energy Information Administration, Annual Energy Outlook

Domestic natural gas consumption increases in all sectors
trillion cubic feet

12 10

History

Projections

Industrial*

8
Electric Generators

6 4 2 0
1990 1995 2000 2005 2010 2015 2020

Residential Commercial

Transportation**

2025

2030

* Includes lease and plant fuel ** Includes pipeline fuel Source: Annual Energy Outlook 2009

Natural gas prices generally increase as more expensive resources are developed to meet demand
2007 dollars per thousand cubic feet

20 18 16 14 12 10 8 6 4 2 0
1990

History

Projections
CNG vehicles $16.70 Residential $14.71 Commercial $13.32 Industrial $9.33 Electricity $8.94 Wellhead $8.40 (nominal $12.18)

2000

2010

2020

2030

Source: Annual Energy Outlook 2009

Natural gas and renewables provide most of the generating capacity added between 2007 and 2030
gigawatts

180 160 140 120 100 80 60 40 20 0 Coal Natural Gas

139

46 13
Nuclear

57

Renewables

Generation mix gradually shifts to lower carbon options
billion kilowatthours
6,000

History

Projections
Oil & Other

5,000

4,000

Renewable Nuclear

3,000

Natural Gas
2,000

1,000

Coal

0 1990

2000

2010

2020

2030

EIA’s Natural Gas Program
• Recent Reports on : pipeline and storage capacity, production, hurricane season 2008, imports/exports • Developments: - Energy in Brief series - Processing Plant Survey (EIA 757) – activated during Hurricane Ike - Topical Analyses: REX, price volatility, oil/gas prices, storage, processing plants, residential consumption, business cycles, reserves and production - Increased outreach

Special Events: Energy Information Administration 2009 Energy Conference: A New Climate For Energy April 7-8, 2009 (Washington, DC) Recurring Products: Weekly Natural Gas Storage Report, Weekly Natural Gas Market Update Annual Energy Outlook 2009, March 2009 (full report) Short-Term Energy Outlook, monthly U.S. Crude Oil, Natural Gas and Natural Gas Liquids Reserves Report, February 2009 Special Reports: Impact of the 2008 Hurricane Season, January 2009 Major Changes in Natural Gas Transportation Capacity, 1998-2008, Nov 2008 Major Legislative and Regulatory Actions, January 2009 World Proved Gas Reserves, 1980-2009, February 2009

Barbara Mariner-Volpe Energy Information Administration Barbara.MarinerVolpe@eia.doe.gov


								
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