# Presentation: 763594

## SHORT - TERMNATURAL GAS OUTLOOK

**National Association of**
**State Energy Officials**
**State Heating Oil and Propane Conference**
**August 7, 2006**
**Barbara Mariner-Volpe,**
**Energy Information Administration (EIA)**
***Barbara.MarinerVolpe@eia.doe.gov***

**www.eia.doe.gov**

## FACTORS AFFECTING GAS MARKET OUTLOOK

**Returns to drilling; Recovery from hurricanes **
**Weather**
**Economic Growth**
**Demand robustness/destruction/switching**
**International markets **
**	****	****pipeline and lng supplies**
**  ****	****	****world oil market/prices**

## Wellhead Natural Gas Prices, 1990-2007

**Source: EIA Short-Term Energy Outlook, July 2006**

## Gas Prices Have Led to  Record-High Drilling Rates

- Source: *Natural Gas Intelligence* *Weekly Gas Price Index*, Baker-Hughes Weekly US Rig Report.

**Gas Prices Have Led to **** Record-High Drilling Rates**

## Hurricanes Katrina and RitaRelative to Offshore Oil and Natural Gas Production Platforms

**Source: Government Accounting Office**

## Production was reduced 800 Bcf as a result of 2005 Hurricanes

**Production was reduced 800 Bcf as a result of 2005 Hurricanes**

**Source: MMS; Ocean Warwick**

## Contiguous U.S. LNG Import Terminals

- Everett  Import Facility - Massachusetts
- 3.5 Billion Cubic Feet Storage Capacity
- 715 Million Cubic Feet per day Vapor.
- 100 Million Cubic Feet per day by Truck

- Lake Charles LNG Import Facility - Louisiana
- 9 Billion Cubic Feet Capacity
- 2.1 Billion Cubic Feet per day Vaporization
- (Expansion complete)

- Elba Island LNG Import Facility - Georgia
- 7.3 Billion Cubic Feet Storage Capacity
- 1.2 Billion Cubic Feet per day Vaporization
- (Expansion completed)

- Cove Point LNG Facility - Maryland
- 7.8 Billion Cubic Feet Storage Capacity
- 1 Billion Cubic Feet per day Vaporization
- (Expansion underway)

- Excelerate Energy Bridge
-  No Storage Capacity
- 500 Million Cubic Feet per day

## LNG import facilities in the continental United States had spare capacity through much of 2005 and early 2006

**The spot market  is still a small part of the market.  **
**Low utilization rates at lower 48 facilities. **
**The expected volumes under long-term contracts have not materialized.**
**New LNG production facilities in Nigeria and Trinidad and Tobago have taken longer than expected.  **
**The new Excelerate Energy Bridge has delivered only two cargoes of LNG to date.**

## Production Recovering From Hurricane Loss in 2005

- Sources: EIA, *Short-Term Energy Outlook*, July 2006

**Projections**

## Imports are Expected to Increase in 2007

- Sources: History:  EIA;  Projections: *Short-Term Energy Outlook,* July 2006.

**Imports are Expected to Increase in 2007**

**LNG Imports:**
**2005:    630 Bcf**
**2006:    760 Bcf**
**2007:  1000 Bcf**

## Natural Gas Stocks Are Well Above Five-Year Average

**Natural Gas Stocks Are Well Above ****Five-Year Average**

**Source: *****Short-Term Energy Outlook*****, July 2006**

**Projection**

**5-Year Range**

**The ****blue area**** represents the minimum and maximum range of historical gas storage levels during the years 2000-2004.**
**The ****red line**** represents *****actual *****storage from Jan 2004 to May 2006 and *****projected***** storage from May 2006 through December 2007**

## Natural Gas Henry Hub Spot Prices(Base Case and 95% Confidence Interval*)

**Natural Gas Henry Hub Spot Prices****(Base Case and 95% Confidence Interval*)**

****The confidence intervals show  +/- 2 standard errors based on the properties of the model.  The ranges do not include the effects of major supply disruptions.***
- Sources: History:  Natural Gas Week;  Projections: *Short-Term Energy Outlook*, July 2006.

- Natural Gas Henry Hub Spot Prices(Base Case and 95% Confidence Interval*)

## Natural Gas Spot &West Texas Intermediate Crude Oil Prices

**Sources: *****EIA Short Term Energy Outlook Jnly2006***

**History**

**Forecast**

**WTI Crude Oil**

**Henry Hub**
**Natural Gas**

## AFTER DECREASING IN 2005 and 2006, GAS CONSUMPTION IS EXPECTED TO INCREASE IN 2007

**Projections**

**History**

**AFTER DECREASING IN 2005 and 2006, GAS CONSUMPTION IS EXPECTED TO INCREASE IN 2007**

| Annual Percent Change in 
Total Natural Gas Demand |  |
| --- | --- |
| 2005 | -2.23% |
| 2006 | -1.64% |
| 2007 | 4.22% |

**Change in Natural Gas Consumption**
**(trillion cubic feet)**

## Residential Sector Expenditures During The Heating Season, 2001-2007 (Billion Dollars)

## Natural Gas Prices to Electric Generators Fell in 2006 Relative to Oil Prices

**Source: *****Short-Term Energy Outlook*****, July 2006.**

**The decline in natural gas prices reflects some easing of market tightness while petroleum product prices have been high because of global market conditions.**

**Delivered price to electric generators** **for residual fuel oil and natural gas**

**History**

**Projection**

**Residual Fuel Oil Price**

**Natural Gas Price**

## To Sum Up:

*EIA expects no significant relief in gas market tightness through 2007.*

- To Sum Up:

## Recent  Natural Gas Reports

**Natural Gas Processing: The Crucial Link Between Natural Gas Production and Its Transportation To Market**
**Overview of the Federal Offshore Royalty Relief Program**
** ****Impact of the 2005 Hurricanes on the Natural Gas Industry in the Gulf of Mexico Region**
**Watch for upcoming reports on storage and pipeline infrastructure!**

- Recent  Natural Gas Reports