US says demand destruction will ease natgas prices

05 December 2006 17:23  [Source: ICIS news]

WASHINGTON (ICIS news)--The continuing high price of natural gas will bring still more demand destruction in US chemicals, other manufacturing and power generation, the Energy Department said on Tuesday, bringing gas prices down over the next several years.

 

In its annual energy outlook the department said it expects current US natural gas prices of around $8/m Btu to decline to $5/m Btu by 2013 before beginning a climb back to $6/m Btu by 2030.

 

The department lowered its estimate of US gas demand growth over the next 24 years to an annual consumption rate of slightly more than 26trn cubic feet (tcf) in 2030.  Last year the department estimated that by 2030 the US would be consuming nearly 27 tcf annually.

 

Current US annual consumption of natgas is around 22 tcf.

 

The lower growth forecast is due chiefly to what the department expects will be an increasing and accelerating shift by electric power companies from natural gas to coal as a generating fuel. 

 

However, part of the lower forecast for gas consumption growth is due to the department’s expectation of continuing demand destruction among chemicals manufacturing and other high-energy industries, according to Guy Caruso, administrator of the department’s Energy Information Administration.

 

“Part of the lower gas demand growth is because chemicals manufacturers and other industries are becoming more energy efficient,” Caruso told a press conference, “but part of it also is some shift of chemicals productive capacity offshore.”

 

Caruso also said that traditional US supplies of natural gas in the lower 48 states and in Canada are in decline and will continue to fall and demand growth will be met by increasing imports of gas over the next 20-30 years, especially in imports of liquefied natural gas (LNG).

 

Imports of liquefied natural gas are projected to increase from 0.6 tcf last year to 4.5 tcf in 2030, the department said. Caruso said construction of new liquefied natural gas import terminals and regasification facilities, including four already being built, and planned expansions at three of four existing terminals likely will be adequate to meet US import demand.

By: Joe Kamalick
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