US EIA sees record gas production aiding LNG exports in 2018, 2019

Washington (Platts)--12 Jun 2018 531 pm EDT/2131 GMT

The US Energy Information Administration Tuesday estimated record dry natural gas production of 81 Bcf/d in 2018, which could help pave the way for LNG exports to reach 3 Bcf/d in 2018 and 5 Bcf/d in 2019.

"Increased production and added infrastructure have positioned LNG exports for considerable growth in 2018 and 2019," EIA Administrator Linda Capuano said in a statement accompanying the agency's Short-Term Energy Outlook.

"EIA's June outlook is that US LNG exports will exceed an average of 5 Bcf/d in 2019, compared to last year's average of just under 2 Bcf/d," she said. "Assuming the forecast holds, US exports of LNG will more than double over a 24-month period."

The agency noted that Dominion Energy's Cove Point LNG facility is ramping up exports. "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 outlook said. In addition, EIA's June outlook increased the forecast for dry gas production this year, Capuano said. "We now expect production to increase by more than 10% from 2017, reaching a record 81 Bcf in 2018," she said.


EIA also boosted its estimates for total marketed gas production compared to its May forecast. For example, the June outlook raised its second-quarter natural gas marketed production estimate by 1.17 Bcf/d to 87.35 Bcf/d and it increased its Q3 marketed production forecast by 1.09 Bcf/d to 88.22 Bcf/d. The agency also raised its marketed gas production forecast for 2018 by 0.9 Bcf/d to 87.26 Bcf/d, and it raised its 2019 estimate by 0.61 Bcf/d to 90.27 Bcf/d.

Total marketed gas production includes volumes that are later extracted to become natural gas liquids such as ethane, propane and butane. In comparison, the dry gas production number reflects the volume after NGLs have been removed.

At the same time, the agency raised its gas consumption estimates 0.83 Bcf/d to 69.95 Bcf/d for Q2, and 0.36 Bcf/d to 69.54 Bcf/d for Q3. EIA increased its consumption estimates for 2018 0.51 Bcf/d to 79.57 Bcf/d, and it raised its 2019 consumption forecast 0.02 Bcf/d to 79.41 Bcf/d. EIA lowered its forecast for Q2 Henry Hub natural gas spot prices 1 cent to $2.84/MMBtu. The Q3 forecast also dropped 1 cent from the previous month to $3.01/MMBtu. The agency projected Henry Hub gas prices would average $2.99/MMBtu for the full year and $3.08/MMBtu in 2019.

Regarding gas storage, EIA noted that the coldest April in the past 21 years resulted in a delayed start to this year's summer injection season. "Working natural gas stocks as of June 1 were [1.817 Tcf], 31% lower than the year-ago level and 22% lower than the five-year (2013-17) average for that time of year," the outlook said.


The agency also noted upcoming changes in the power generation mix. "EIA's June forecast is for wind energy to overtake hydro in terms of electricity generation in 2019, which marks a historic shift in the share of renewables generation," Capuano said. "We can attribute this shift, in large part, to significant increases in wind generation capacity, going from about 81 GW in 2016 to a forecasted 104 GW in 2019," she explained.

EIA forecasted that wind generation will rise to 746,000 MWh/d in 2018 and to 777,000 MWh/d in 2019. "If factors such as precipitation and snowpack remain as forecast, conventional hydropower is forecast to generate 752,000 MWh/d in 2019, which would make it the first year that wind generation exceeds hydropower in the United States." The agency also estimated that the share of US total utility-scale electricity generation from natural gas-fired power plants will rise to 34% in 2018 and 2019 from 32% in 2017. Electricity generation's share from coal is expected to average 28% in 2018 and 2019, down from 30% in 2017, EIA said. The nuclear share of generation was 20% in 2017 and is forecast to be 20% in 2018 and 19% in 2019, the agency said. --Kate Winston,

--Edited by Valarie Jackson,

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