Higher natural gas prices will prompt the production of dry natural gas in the second half of 2021; the Energy Information Administration foresees in its most recent Short-Term Energy Outlook.
The agency expects that the annual NG spot price at the Henry Hub will increase 0,98 cents per million British Thermal Unit (MMBtu); to an average of $3,01 MMBtu in 2021.
This increase may push the dry natural gas production, as said above, just after reaching a monthly low of 87,3 billion cubic feet per day in March of this year. Such is the forecast of EIA.
Still, in an annual basis, dry NG production may fall from an average of 90,8 billion cubic feet per day in 2020, to a 88,2 Bcf/d in 2021. Low crude oil prices, and the economic crash derivate from the pandemic is a crucial factor for this decrease.
In the U.S. market, natural gas consumption may decrease by 2,3 Bcf/d to an average of 80,8 Bcf/d in 2021. The decrease is mainly driven by the drop of natural gas used in the electric sector, due to the renewable energy push.
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Liquified Natural Gas will keep rising
As the agency foresaw, most of the electric capacity that will be added to the U.S. grid will be from renewable sources, thus, dropping the use of this commodity in one of its crucial sectors.
“EIA forecasts natural gas consumption in the electric power sector to decline by another 1.7 Bcf/d to average 26.4 Bcf/d in 2022,” the report underlines.
Nevertheless, consumption in other sectors such as industrial, residential and commercial will have its use increased during this year. Mainly due to economic growth and slightly cooler winter weather.
On the other side, LNG exports, by pipeline or by shipping methods will continue its rising trend in 2021 and 2022.
As we reported previously, in early December, U.S. LNG exports by pipeline reached a high record; exports by shipping also peaked.
EIA’s forecast is that both methods, by ship or by pipeline, exports of LNG will increase and remain somewhat at the same point of 8,5 8,6 Bcf/d.