The Energy Information Administration said in its August Short-Term Energy Outlook (STEO) that US dry natural gas production would increase from 91.4 Bcfd in the first half of 2021 to 92.9 Bcfd in the second half. US natural gas production is expected to rise further to 94.9 Bcfd in 2022. EIA said natural gas and crude oil prices would stay at levels that will support sustained production growth throughout the reporting period.
US gas demand is forecast to average 82.5 Bcfd this year, down 1% from 2020. EIA said that high gas prices would prompt utilities to switch to coal. On the other hand, demand from residential and commercial users is expected to increase by 1.2 Bcfd from the 2020 level, while industrial use is forecast to rise by 0.2 Bcfd from last year. EIA noted that expanded economic activity and colder winter temperatures in 2021 would drive the increase and residential and commercial gas consumption. By 2022, US natural gas consumption is expected to average 83.8 Bcfd.
EIA expects the gas spot price at Henry Hub to average $3.71 per MMBtu in this year’s third quarter and $3.42 per MMBtu for all of 2021, rising from last year’s average of $2.03 per MMBtu. EIA said rising LNG exports and growing demand from residential, commercial, and industrial users would drive the increase in gas prices. In 2022, the average Henry Hub gas price is expected to decline to $3.08 per MMBtu amid increasing US natural gas output.
