LNG

The US government’s short-term energy report for June forecasts declines in natural gas production in the Haynesville and Appalachia shale basins before a rebound in 2025 backed by higher benchmark Henry Hub gas prices, while also forecasting annual record production in 2024 and 2025 for US crude oil.

The American Gas Association said the state of Nebraska’s state legislature became the 26th state to pass fuel choice legislation in a unanimous and bipartisan vote, securing the protection of energy choice for consumers in a majority of states across the country.

The AGA explained that consumer energy choice preserves access to safe, clean and affordable energy resources including natural gas that offer a sustainable pathway to the shared goal of reducing emissions while maintaining affordability, reliability and quality of life for Americans.

“Thanks to the bipartisan action of now 26 state governments, more than 157 million Americans and 58 million households have a protected choice when it comes to how to fuel their homes and businesses,” said AGA President and CEO Karen Harbert.

Natural gas usage

“The average home using natural gas for space heating, water heating, cooking and clothes drying has about 18 percent lower carbon dioxide emissions than those attributable to an all-electric home, and the average family using natural gas for those purposes saves an average of $1,132 per year,” explained Harbert.

“Over the past 10 years, American families have saved a total of $125 billion thanks to natural gas,” she stated.

“Those are numbers we can be proud of. They also highlight how harmful natural gas bans would be for American families,” Harbert stated.

The AGA represents more than 200 local energy companies that deliver natural gas throughout the US.

There are more than 77 million residential, commercial and industrial natural gas customers in the US, of which 95 percent, or around 73M customers, receive their gas from AGA members.

Fuel choice legislation preserves access to natural gas in homes and businesses in states that have enacted them across America.

Nebraska became the 26th state to pass such a law, joining Idaho, Montana, North Dakota, South Dakota, Wyoming, Utah, Arizona, Kansas, Oklahoma, Texas, Iowa, Missouri, Arkansas, Louisiana, Indiana, Ohio, West Virginia, New Hampshire, Kentucky, Tennessee, North Carolina, Mississippi, Alabama, Georgia and Florida.

Bipartisan moves

“Every state to pass fuel choice legislation has done so in a bipartisan manner,” said the AGA.

“Since 1990, emissions from the natural gas distribution system have declined by 70 percent, even as demand for and usage of natural gas has increased with natural gas served to 23.4 million more consumers and the number of miles of distribution pipeline increasing by 59 percent,” the AGA noted.

US Natural gas is currently 3.3 times more affordable than electricity and expected to remain substantially more cost-efficient through at least to 2050.

“The affordability of natural gas is a critical reason why more than 500,000 families signed up for natural gas space heating, rather than electric heat pumps, over the past five years,” the AGA said.

The US Government expects liquefied natural gas exports to increase in 2023 and 2024 but in the short term during April and May there would be slight declines in the nation’s natural gas output because of pipeline maintenance.

The US Government forecasts a rise in natural gas prices as a result of both higher winter demand and rising LNG exports while the Freeport LNG plant was seen ramping-up in the coming months to reach full capacity by March 2023 after going on stream later.

June 7 (LNG) - US natural gas futures have jumped to a 13-year high as very hot temperatures were forecast in the next week combined with lower gas field production levels and more LNG shipments. The front-month July New York Mercantile Exchange (Nymex) Henry Hub natural gas futures contract increased almost 10 percent on June 6.

   The Henry Hub prices for July hit $9.368 per million British thermal units while the August contract was quoted at $9.350. The Nymex price on June 7 was last at $9.49 per MMBtu. Analysts said the Nymex futures were also driven by rising LNG exports while natural gas output is falling short of forecasts.

The United States said it expected high levels of US LNG exports to continue in 2022 with a 16 percent increase, though stressed that there were heightened levels of uncertainty resulting from a variety of factors, including Russia’s invasion of Ukraine.

The United States expects dry natural gas production will be flat and average 92.9 billion cubic feet per day in the second half of 2021 before output rises in 2022 to underpin LNG exports and more gas use outside the electricity generating sector amid switching to less expensive US coal for power.

US production of natural gas dropped in February while LNG exports also plunged 23 percent because of the bad weather and navigational restrictions on the Gulf Coast during the month.

US natural gas resources are so abundant even amid growing LNG exports and pipeline supplies to Mexico that the government says that the 
Lower 48 states will end the winter heating season with 12 percent more inventory than the previous five-year average.

Working natural gas in storage will end the 2019-2020 winter heating season from November 1 to March 31 at 1,935 billion cubic feet.

“This increase is the result of mild winter temperatures and continuing strong production,” said the Energy Information Administration in its latest short-term energy outlook.

The EIA then forecasts that net injections during the refill season from April 1 to October 31 will bring the total working gas in storage to 4,029 Bcf, which would be the largest monthly inventory level on record.

Year-over-year growth in dry natural gas production offset the growth in exports, especially of LNG, throughout 2019.

“On October 11, 2019, the total natural gas in storage surpassed the previous five-year average - an indicator of typical storage levels - for the first time since mid-2017,” added the report.

The report said it expected withdrawals from working natural gas storage to total 1,790 Bcf at the end of March 2020. 

“If realized, this would be the least natural gas withdrawn during a heating season since the winter of 2015-2016, when temperatures were also mild,” said the EIA.

Injections into and withdrawals from natural gas storage balance seasonal and other fluctuations in consumption. 

Natural gas demand is greatest in the winter months, when residential and commercial demand for natural gas for space heating increases. 

However, natural gas consumption in the power sector is greatest in summer months, when overall electricity demand is relatively high because of air conditioning.

The EIA expects the total working natural gas in storage will exceed the previous five-year average for the remainder of 2020, despite declines in dry natural gas production, increases in natural gas consumption in the electric power sector, and increases in natural gas exports. 

“Monthly natural gas production is expected to decline in 2020 from last year’s record levels as lower natural gas prices reduce incentives for natural gas-directed drilling and as lower crude oil prices reduce incentives for oil-directed drilling and associated gas production,” the report explained.

The United States said natural gas production will average a record 91.3 billion cubic feet per day in 2019, up 8.0 Bcf per day from the previous record in 2018, as shale gas begins to dominate the output and opens the way for more LNG and pipeline exports and domestic gas-fired power.