natural gas outlook national association of state energy officials state heating oil and propane...
TRANSCRIPT
Natural Gas OutlookNatural Gas OutlookNational Association of State Energy Officials
State Heating Oil and Propane Conference
August 30, 2004
William TrapmannEnergy Information Administration (EIA)[email protected]
www.eia.doe.gov
Presentation CoveragePresentation Coverage
• Natural Gas Prices
• Production Trends
• Natural Gas Imports
• Storage
• Short-Term Market Outlook
Natural Gas PricesNatural Gas Prices
Natural Gas Prices Generally Track Natural Gas Prices Generally Track Oil PricesOil Prices
NYMEX Natural Gas Futures Near-Month Contract Settlement Price,
West Texas Intermediate Crude Oil Spot Price,
and Henry Hub Natural Gas Spot Price
WTI Spot Price
NYMEX Futures Price
Henry Hub Spot Price
Why Are Current Natural Gas Prices High?
• High Petroleum Prices
• Returns to Drilling
• Lags in Bringing New Production to Market
• Net Imports Flat
• Demand
Natural Gas Natural Gas Production TrendsProduction Trends
Source: Energy Information Administration, Advance Summary of U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves 2002 Annual Report
Reserve Additions Exceeded Production Reserve Additions Exceeded Production for 8 of the Last 9 Yearsfor 8 of the Last 9 Years
85%
108% 108% 107% 104%
83%
118%
152%
131%
118%
88%
0%
20%
40%
60%
80%
100%
120%
140%
160%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Pe
rce
nt
of
U.S
. Ga
s P
rod
uc
tio
n R
ep
lac
ed
Drilling Increases Are Necessary to Maintain Production Levels ……
A Growing Percentage of Production Is from Wells Three Years Old or Less
Sources: EIA.
0
10
20
30
40
50
60
Pe
rce
nt
To
tal W
ellh
ea
d
Ca
pac
ity
2003
–< 1 Year Old–< 2 Years Old–< 3 Years Old
1993
–< 1 Year Old–< 2 Years Old–< 3 Years Old
$0
$2
$4
$6
$8
$10
$12
$141/
2/98
7/31
/98
2/26
/99
9/24
/99
4/20
/00
11/1
0/00
5/18
/01
11/3
0/01
6/14
/02
12/2
7/02
7/25
/03
2/20
/04
Pri
ce (
Do
llar
s p
er M
MB
tu)
0
200
400
600
800
1000
1200
Nu
mb
er o
f R
igs
Number of Rigs Drillingfor Natural Gas
Weekly Henry Hub Spot Price
Source: Natural Gas Intelligence Weekly Gas Price Index, Baker-Hughes Weekly US Rig Report.
Gas Rigs Tend To Follow Spot Prices Gas Rigs Tend To Follow Spot Prices With A LagWith A Lag
*
*
Rig Growth Continues but Rig Growth Continues but Production Remains FlatProduction Remains Flat
0
200
400
600
800
1000
1200
1991 1993 1995 1997 1999 2001 2003 2005
Nu
mb
er G
as R
ota
ry R
igs
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
20.5
Tri
llio
n C
ub
ic F
eet
Pro
du
ctio
nU.S. Dry Gas Production & Rotary Rigs
Dry Gas Production
Average Annual Rig Count
Sources: EIA, Baker Hughes Gas Rig Counts, Short-Term Energy Outlook, August 2004
Natural Gas ImportsNatural Gas Imports
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1997 1998 1999 2000 2001 2002 2003 2004 2005
Bil
lio
n C
ub
ic F
eet
Pipeline LNG
Projections
Sources: History: EIA; Projections: Short-Term Energy Outlook August, 2004.
LNG Imports:2003: 507 Bcf2004: 690 Bcf2005: 800 Bcf
Pipeline Imports Are Expected to Decline, Pipeline Imports Are Expected to Decline, While LNG Imports IncreaseWhile LNG Imports Increase
LNG Imports at Existing TerminalsLNG Imports at Existing Terminals
0
100
200
300
400
500
600
700
800
900
2000 2001 2002 2003 2004 2005
Bil
lion
Cu
bic
Fee
t
History Projection
Everett, MA
Elba Island, GA
Cove Point, MD
Lake Charles, LA
Source: History, Natural Gas Monthly; 2004-2005: Short-Term Energy Outlook, August 2004.
Total
There Are Numerous Proposals There Are Numerous Proposals For New LNG Import FacilitiesFor New LNG Import Facilities
Proposed Marine Terminal
Existing Marine Terminal
Sources: Energy Information Administration, U.S. LNG Markets and Uses: June 2004 Update.
Projects shown as of June 2004
Natural Gas StorageNatural Gas Storage
Seasonal Natural Gas Load Patterns Seasonal Natural Gas Load Patterns By Sector (BCF)By Sector (BCF)
0
200
400
600
800
1000
Jan-0
1
Mar
-01
May
-01
Jul-0
1
Sep-0
1
Nov-01
Jan-0
2
Mar
-02
May
-02
Jul-0
2
Sep-0
2
Nov-02
0
200
400
600
800
1000
Jan-0
1
Mar
-01
May
-01
Jul-0
1
Sep-0
1
Nov-01
Jan-0
2
Mar
-02
May
-02
Jul-0
2
Sep-0
2
Nov-02
0
200
400
600
800
1000
Jan-0
1
Mar
-01
May
-01
Jul-0
1
Sep-0
1
Nov-01
Jan-0
2
Mar
-02
May
-02
Jul-0
2
Sep-0
2
Nov-02
Source: EIA.
0
200
400
600
800
1000
Jan-0
1
Mar
-01
May
-01
Jul-0
1
Sep-0
1
Nov-01
Jan-0
2
Mar
-02
May
-02
Jul-0
2
Sep-0
2
Nov-02
Residential
Industrial
Commercial
Electric Power
Underground Natural Gas Storage Facilities Underground Natural Gas Storage Facilities In the Lower 48 StatesIn the Lower 48 States
Natural Gas in Storage Now Exceeds Natural Gas in Storage Now Exceeds The 5-Year AverageThe 5-Year Average
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Aug
-02
Nov
-02
Feb
-03
May
-03
Aug
-03
Nov
-03
Feb
-04
May
-04
Aug
-04
Bil
lio
n C
ub
ic F
eet
Source: Energy Information Administration, Weekly Natural Gas Storage Report, August 12, 2004.
Note: Actual working gas stocks denoted by red line; blue lines show the maximum and minimum volumes in 1999-2003.
Natural Gas in Storage Entering Heating SeasonNatural Gas in Storage Entering Heating SeasonIs Expected to Exceed the Is Expected to Exceed the
Range of the Past Five YearsRange of the Past Five Years
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Wo
rkin
g G
as i
n S
tora
ge
(bil
lio
n c
ub
ic f
eet)
Projection:3,196 Bcf
Storage Stocks as of the End of October
Source: Historical data: EIA; Projected data: Short-Term Energy Outlook August 2004
Stocks at end of March
Refill Volumes
U.S. Liquefied Natural Gas FacilitiesU.S. Liquefied Natural Gas Facilities
Notes: Map excludes the import facility in Puerto Rico. “Other” includes: stranded utilities, vehicular fuel facilities, nitrogen rejection units and other special processing plants.
Source: Energy Information Administration, U.S. LNG Markets and Uses: June 2004 Update, June 2004.
Storage (with liquefaction)Storage (without liquefaction)
(57)(39)
(12)Other
.
Marine Terminal - Import (4)Marine Terminal - Export (1)
LNG Facilities in the U.S. NortheastLNG Facilities in the U.S. Northeast
Source: Adapted from Energy Information Administration, U.S. LNG Markets and Uses: June 2004 Update, June 2004.
NewWMF
Storage (with liquefaction)
Storage (without liquefaction)
Marine Terminal
Short-Term Price Short-Term Price OutlookOutlook
Short-Term Outlook for Natural GasShort-Term Outlook for Natural Gas
• Continued price pressure– No short-term relief expected
• Consumption – flat growth in 2004 and 2005
• Production – marginal growth through 2005– New well completions are offset by the production
declines for existing wells
• Net imports – slight increase in 2004
and then decrease in 2005– Increasing LNG imports are offset by decreasing
pipeline imports from Canada
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Ja
n-9
9
Ma
y-9
9
Se
p-9
9
Ja
n-0
0
Ma
y-0
0
Se
p-0
0
Ja
n-0
1
Ma
y-0
1
Se
p-0
1
Ja
n-0
2
Ma
y-0
2
Se
p-0
2
Ja
n-0
3
Ma
y-0
3
Se
p-0
3
Ja
n-0
4
Ma
y-0
4
Do
llars
per
Th
ou
san
d C
ub
ic F
eet
Se
p-0
4
Ja
n-0
5
Ma
y-0
5
Se
p-0
5
Monthly
Projections
*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: EIA; Projections: Short-Term Energy Outlook, August 2004.
Natural Gas Spot Prices Are Expected to Natural Gas Spot Prices Are Expected to Average $6.21 This YearAverage $6.21 This Year
(Base Case and 95% Confidence Interval*)(Base Case and 95% Confidence Interval*)
Average Spot Price:
about $6.21 /Mcf in 2004
about $6.60 /Mcf in 2005
$0
$2
$4
$6
$8
$10
$12
$14
$16
Do
lla
rs P
er
Mc
f Residential
Commercial
Industrial
Electric Utilities
Wellhead
U.S. Natural Gas Prices Are Expected to U.S. Natural Gas Prices Are Expected to Trend Upward Through 2005Trend Upward Through 2005
Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2004.
History Outlook
*Gas-weighted heating degree-days
Heating Demand Indicators:Heating Demand Indicators:Probability Ranges for U.S. Degree-Days* Probability Ranges for U.S. Degree-Days*
This WinterThis Winter
Winter weather was warmer than normal last year.
Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2004.
0
200
400
600
800
1000
1200
Oct Nov Dec Jan Feb Mar Apr
He
ati
ng
De
gre
e D
ay
s
Minimum
Maximum
Normal
Winter 2003-2004
Volatility HappensVolatility HappensIllustrative Supply and Demand CurvesIllustrative Supply and Demand Curves
SD1
D2
D1D2
0
80 82 83 85 87 89 90 92 94 96 97 99
percent supply utilization rate
wel
lhea
d p
rice
D1
D2
D3
D4
Pri
ce
Supply Capacity Utilization Rate
Household Winter Heating Fuel SummaryHousehold Winter Heating Fuel Summary
Notes: Consumption based on typical per household use for the regions noted.Sources: History: EIA; Projections: Short-Term Energy Outlook August 2004.
Illustrative Consumer Prices and Expenditures for Heating Fuels During the WinterAverage 2001-2002 2002-2003 2003-2004 2004-2005
1998-2000 Actual Actual Actual Base ForecastNatural Gas (Midwest) Consumption (mcf) 88.8 81.3 95.2 89.9 97.8 Avg. Price ($/mcf) 7.61 7.41 8.40 9.69 10.72 Expenditures ($) 676 602 800 871 1049 Heating Oil (Northeast) Consumption (gals) 673 577 743 728 696 Avg. Price ($/gal) 1.12 1.10 1.34 1.36 1.57 Expenditures ($) 754 635 993 991 1094 Propane (Midwest) Consumption (gals) 877 803 941 888 966 Avg. Price ($/gal) 1.10 1.11 1.20 1.30 1.41 Expenditures ($) 964 888 1125 1156 1361Notes: Consumption based on typical per household use for regions noted. Prices shown are national average delivered-to-household prices. mcf = thousand cubic feet. gal = gallon.
www.eia.doe.gov