EIA expects Henry Hub price rebound to $3.08 in 2019

Monday, 02 July 2018

In the agency’s latest Short-Term Energy Outlook (STEO), the Q2 Henry Hub natural gas spot prices is seen drop 1 cent to $2.84/MMBtu, while the Q3 forecast also fell 1 cent from the previous month to $3.01/MMBtu.

Currently, a large working natural gas inventory deficit and the late start to the storage injection season contributed to higher Henry Hub prices despite record production growth (see graph). The Henry Hub natural gas spot price averaged $2.80/MMBtu in May, when dry gas production was up 13% higher year-on-year. The EIA projects dry gas production to increase by 10% in 2018 and by 3% in 2019.

LNG exports poised to surge

"Increased production and added infrastructure have positioned LNG exports for considerable growth in 2018 and 2019," commented EIA Administrator Linda Capuano. In its June outlook, the EIA further increased the forecast for dry gas production this year. "We now
expect production to increase by more than 10% from 2017, reaching a record 81 Bcf in 2018," she said.

As the shale gale sputters on, the continuous rise in production is paving the way for US LNG exports to top 3 Bcf/d in 2018 and 5 Bcf/d in 2019. Assuming the EIA’s June forecast holds, US exports of LNG will more than double over a 24-month period.

Cove Point LNG, the Dominion Energy-led export venture in Maryland, is ramping up fast. In April, the facility exported an estimated 13.4 Bcf, implying baseload utilization of 65% and, in May, it exported an estimated 23.5 Bcf, implying baseload utilization of 94%, the STEO report reads. And more liquefaction and export plants come on stream in the southern states, including Georgia, Louisiana and Texas.

By 2021, the U.S. is expected to add 6.05 billion cubic feet per day of new liquefaction capacity in addition to 3.5 Bcf/d already in operation at Sabine Pass and Cove Point. According to the EIA, “Before the end of 2018 the Elba Island liquefaction project in Georgia is expected to commission the first 6 of 10 small modular liquefaction units, with a combined capacity of 0.2 Bcf/d. “New trains at Cameron, Freeport, and Corpus Christi - plants under construction along the US Gulf Coast - are expected to be commissioned in the next three years.”