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Natural gas production seen meeting US consumption, export growth through 2018

Domestic dry natural gas production that is expected to average 73.5 Bcf/d in 2017 should heap pressure on the Henry Hub spot price; however, growing exports and domestic consumption in 2018 will counter still rising production and help drive a boost to prices, the U.S. Energy Information Administration said.

The EIA's forecast for a 1.2 Bcf/d increase in 2017 dry natural gas production from the 2016 level, outlined in its latest Short-Term Energy Outlook, will be outdone by a 3.9 Bcf/d increase from 2017 levels to 77.34 Bcf/d in 2018.

The hike in 2017 production is expected to drive an average 2017 Henry Hub spot price of $3.06/MMBtu, but the price will climb to $3.29/MMBtu in 2018, as natural gas production meets an expanding LNG export market and growing domestic consumption.

Natural gas consumption in 2017 is expected to have fallen from 75.11 Bcf/d in 2016 to 72.62 Bcf/d in 2017, and will climb to 75.79 Bcf/d in 2018, EIA data shows. Domestic consumption in the residential/commercial and industrial sectors are forecast to rise in 2017 and 2018, while electric power-sector consumption is forecast to slip from 27.28 Bcf/d in 2016 to 24.47 Bcf/d in 2017 and the climb to 25.61 Bcf/d in 2018.

Data shows that gross pipeline exports climb from 5.87 Bcf/d in 2016, to 6.71 Bcf/d in 2017 and 7.37 Bcf/d in 2018.

LNG imports will shrink from 0.24 Bcf/d in 2016 to 0.21 Bcf/d in 2017 and 2018, while exports jump from 0.51 Bcf/d in 2016 to 1.95 Bcf/d in 2017 and 3.25 Bcf/d in 2018, as LNG export facilities expand operations. By the end of 2017, Trains 1 through 4 at Cheniere's Sabine Pass facility in Louisiana are expected to be fully operational, and Cove Point LNG in Maryland is expected to come online. In 2018, Sabine Pass and Cove Point ramp up capacity and two new LNG facilities come online.