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US EIA raises natural gas production estimates for Q2 and Q3, drops spot price forecast


Q3 Henry Hub spot gas price forecast lowered 4 cents to $2.65/MMBtu

US EIA raises Q2 gas demand forecast 0.90 Bcf/d to 72.07 Bcf/d

Washington — The US Energy Information Administration bumped up its natural gas production estimates for the second and third quarters of 2019 and took 2 to 4 cents off its Henry Hub spot price forecast for the same periods.

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In its June Short-Term Energy Outlook, EIA raised 0.68 Bcf/d to 97.05 Bcf/d its natural gas marketed production estimate for the US in Q2 2019, and its Q3 production forecast 0.64 Bcf/d to 98.22 Bcf/d. The production estimate also rose 0.43 Bcf/d to 97.57 for the full year 2019, but declined 0.35 Bcf/d 99.07 Bcf/d for 2020.

The agency said it expects dry gas production will continue to grow in 2020, "albeit at a slower rate" than 2019.

Amid strong production, EIA is forecasting that at the end of October, natural gas storage inventories will reach almost 3.8 Tcf, about equal the five-year average, as builds during injection season outpace the prior five-year average. For instance, combined net injections during April and May are estimated to be the largest on record, at 831 Bcf/d for the two-month period, EIA said.

The agency also raised its Q2 gas consumption estimates 0.90 Bcf/d to 72.07 Bcf/d, and forecast only a slight 0.02 Bcf/d uptick to 74.91 Bcf/d for Q3. Overall natural gas consumption is seen growing to 84.17 Bcf/d in 2019 and 84.38 Bcf/d in 2020, from 82.08 Bcf/d in 2018.


As more LNG export facilities come online in 2019 and 2020, and pipeline exports to Mexico increase, EIA Administrator Linda Capuano said "US natural gas exports are on pace to set new records over the next few years. "EIA forecasts that US natural gas exports will reach almost 18 Bcf/d by the end of 2020. By comparison, the United States exported roughly 9.9 Bcf/d on average in 2018," she said.

Despite consumption increases, the agency expects stronger growth in natural gas production will keep pressure on prices in 2019.

EIA lowered its Q2 Henry Hub natural gas spot price forecast 2 cents to $2.60/MMBtu. The Q3 forecast also fell 4 cents from the previous month's estimate to $2.65/MMBtu.

The agency projected Henry Hub natural gas prices would average $2.77/MMBtu for full-year 2019 and $2.77/MMBtu in 2020, down from the previous month's estimates of $2.79/MMBtu and $2.78/MMBtu, respectively.


On the power side, Capuano noted that EIA "continues to forecast a shift in the US electricity fuel mix, reflecting the power sector turning to gas as a result of costs considerations at the same time ... renewable capacity sees significant growth."

The share of utility-scale generation from gas is seen rising to 38% in 2020 from 35% in 2018. Over the same time period, coal is seen declining to 23% from 27%.

"EIA is forecasting that natural gas and renewables will generate an average of about 57% of US electricity by 2020," Capuano said.

She noted that generation from wind reached nearly 1 million MWh/d in April 2019.

"The milestone marks a new record for wind's contribution to US electric generation, which EIA forecasts will exceed the contribution from hydropower generation for the first time this year," Capuano said.

Combined, EIA forecasts that renewables including wind, solar, and hydropower will make up 18% of US power in 2019 and nearly 20% in 2020.

CO2 emissions from the US energy sector are seen declining 2% in 2019 and 0.9% in 2020, as temperatures return to near normal and gas and renewables take up a greater share of the fuel mix.

-- Maya Weber,

-- Edited by Valarie Jackson,

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