LNG News Editor:
The US Government forecasts increases in liquefied natural gas exports as well as higher benchmark Henry Hub natural gas prices and a rise in the Brent crude oil price in early 2025, while outlining working gas storage expectations at end of injection season.
“We expect that the Henry Hub natural gas spot price will average almost $2.90 per million British thermal units in the second half of this year, up from an average of about $2.10 per MMBtu, and to hit $3.30 on average in 2025,” said the Energy Information Administration in the July Short-Term
Energy Outlook.
The Outlook expects US liquefied natural gas gross exports would be unchanged in 2024 compared with 2023 at 12 billion cubic feet per day, though they were still on track to increase to 14 Bcf per day in 2025.
The EIA stated that the average Brent crude oil would hit $88 per barrel in 2025, up $86 a barrel in 2024.
The report also warned about the possible effects on the forecasts from Hurricane Beryl, the first major storm of the Hurricane season running from June to November.
“We completed modeling before Hurricane Beryl hit the Texas Gulf Coast, a major hub for the US energy industry, on July 8,” said the report.
“EIA will continue to monitor the effects of the hurricane on critical energy infrastructure and will communicate important information in subsequent reports,” it stated.
Natural gas output
US dry natural gas production was expected to decrease slightly in 2024 because of less natural gas-directed drilling and production curtailments in the first half of 2024.
“Less production this year has helped keep natural gas injections into storage so far this injection season (April-October) below the five-year average (2019-2023),” the EIA noted.
Natural gas storage inventories were 19 percent above the five-year average at the end of June after ending the withdrawal season on March 31 at 39 percent above the five-year average.
“We expect natural gas storage injections to continue to fall below the five-year average this injection season because of relatively flat production through the second half of 2024 and a summer increase in demand from the electric power sector,” the EIA explained.
“As a result, the surplus of natural gas in storage will be further reduced, and we expect that inventories will end the summer injection season on October 31 at almost 3,970 billion cubic feet, still 6 percent above the five-year average and 4 percent more than inventories at the end of the 2023 injection season,” the report added.
The EIA also forecasts that because of rising natural gas prices it expected dry natural gas production to increase by 2 percent in 2025.
Mountain Valley
The report also mentioned the Mountain Valley Pipeline start-up in June 2024 in the Appalachia region of the US, providing additional takeaway capacity for production.
“We do not expect the full 2 Bcf per day of capacity to be utilised until next year because of constraints downstream of the interconnection with the Transcontinental Gas Pipeline in Pittsylvania County, Virginia,” said the EIA.
Although natural gas continues to be the largest source of US electricity generation, the EIA said it expected 2 percent less natural gas generation in the second half of 2024.
“This forecast decline is due to more generation from renewable sources as well as our expectation of 7 percent higher Henry Hub natural gas prices in the second half versus 2023,” the report said.
“We expect higher natural gas prices will drive a 3 percent increase in coal generation during the second half,” it added.
