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Natural gas market outlook: North America

LNG Industry,

Navigant’s Energypractice issued its North American Natural Gas Market Outlook, Fall 2013 (Outlook) on 19 December. This included updated forecast data on natural gas prices, dry conventional gas and shale gas production, natural gas demand and gas storage activity.

According to the updated forecast, the real Henry Hub average price is expected to return to above US$ 5/million Btu after 2020 and reach US$ 6.93/million Btu by 2035.

Navigant’s analysis projects that consumer demand for natural gas in North America will increase from 77.8 billion ft3/d in 2013 to 108.7 billion ft3/d in 2035. The analysis predicted that North American dry natural gas production is expected to grow by 44% from 87.3 billion ft3/d in 2013 to 124.5 billion ft3/d in 2035 and that North American LNG exports would to rise to 7.8 billion ft3/d by 2022.

Gordon Pickering, a director with Navigant’s Energy Practice and author of the Outlook, said: “Five years after the first significant effects of gas shale in the US, the North American market is still being driven by fundamental gas supply and production growth.

“Looking forward, the market is expected to be largely influenced by abundant, even surplus supply in the short- and mid-term, then evolve over the longer term into a market that is fully connected to the global natural gas market. The global connection will result from both the rapidly developing North American natural gas liquefaction sector and natural gas exports to anxiously waiting markets, particularly in Europe and in Asia.”

The Outlook posits that the total North American natural gas consumption for gas-fired generation and industrial use are projected to grow at an average annual rate of 3.7% and 2.4% respectively through 2020. In the near term, North American natural gas prices are set to recover from lows in 2012, but will stay at moderate price levels. In the mid-term, Henry Hub prices are expected to rise to more than US$ 5/million Btu as a result of increased gas-fired power generation, higher natural gas consumption for industrial use and a number of LNG export projects coming online. Over the long-term, natural gas prices are projected to continue the upward trend, albeit at a slower rate. Overall, the Outlook projects that natural gas prices in North America will stabilise, demonstrating less volatility over the long-term, and helping to support a healthier market environment for both producers and end consumers.

Adapted from press release by Ted Monroe

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