Summary of a Workshop on U.S. Natural Gas Demand, Supply, and Technology Looking Toward the Future (2003) / Chapter Skim
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2. U.S. Natural Gas Demand
2. U.S. Natural Gas Demand
Pages 13-33
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From page 13... ...
How well this clean, versatile energy source will meet this role will depend greatly on how long natural gas remains reliable and affordable. After years of stability, natural gas prices have recently become volatile and have been trending upward.
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From page 14... ...
The U.S. natural gas drilling rig count averaged only 746 rigs during the first quarter of 2003, up 11 percent compared to the first quarter of 2002, even though wellhead gas prices averaged $5.54/Mcf during this time, about two and one half times higher than the first quarter of 2002 (EIA, 2003c)
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From page 15... ...
In addition, proposed energy policies, such as the Bush Administration's Clear Skies Initiative, conservation, and international pressures to address carbon emissions and global climate change will further influence the demand and price for natural gas in coming years. This chapter examines the outlook for natural gas demand and the forces that will shape the role it may play in our domestic energy future.
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From page 16... ...
Competition among Fuels Assuming natural gas prices moderate and become less volatile, natural gas consumption is projected to increase faster than consumption of competing fuels coal, nuclear, petroleum, and renewables (EIA, 2003a)
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Assuming natural gas prices remain moderate, as forecast by the 2003 Annual Energy Outlook, 80 percent of the new electricity generation capacity of the 428 GW projected to be needed by 2025 would be fueled bv natural gas, if available and competitively priced.
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NATURAL GAS DEMAND, SUPPLY, AND TECHNOLOGY 4,000 3,000 in o s ~ 2,000 o y o .
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. The higher natural gas prices induced conservation as well as the beginning of demand destruction in selective industrial sectors, reducing natural gas demand and causing a temporary decline in gas prices.
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While the recent rate of injection into storage has been impressive, the volume of working gas in storage is still about 15 percent below the 5-year average, providing the basis for continued high near-term gas prices and its associated loss (and possible destruction) of industrial demand.
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average annual natural gas wellhead prices for 1970 to 2025 in 2001 dollars per thousand cubic feet. SOURCE: Figure was prepared for Annual Energy Outlook 2003 Press Release, November, 2003.
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From page 22... ...
(see Table 2.2~. This is due in part to the fact that the basic assumptions for economic growth, primary energy demand, electricity demand, and future natural gas prices in these forecasts are similar: · The projection for year 2015 natural gas consumption of 29.5 Tcf in the 2003 Annual Energy Outlook is essentially the same as by Gil and 2 percent higher than by PIRA.
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From page 23... ...
NATURAL GAS DEMAND in o Q l US Cal lo Cal in in ~ 0 in <,, 8 ~ X ~ .
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From page 24... ...
OUTLOOK FOR CANADIAN AND MEXICAN NATURAL GAS DEMAND To a large extent the United States is part of an integrated North American natural gas market with Canada and Mexico. As such, changes in demand for natural gas in these two countries will directly affect the outlook for the U.S.
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From page 25... ...
However, because of increased growth in gas-fired electricity generation and significant expansions in oil sand development, Canada's internal demand for natural gas is expected to increase substantially in the next several years (Greg Stringham, Canadian Association of Petroleum Producers, personal communication, 2003~. In 2002, oil sands provided nearly 0.8 million barrels per day of production and consumed 300 million to 400 million cubic feet per day (MMcf/day)
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From page 26... ...
natural gas demand depends on numerous assumptions and expectations, including the rate of domestic economic growth, future natural gas and competing energy prices, pending energy legislation and policies, and the reliability of natural gas supplies. As shown by recent events, the factors governing gas demand can change dramatically as new information and conditions emerge.
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From page 27... ...
These relatively modest annual differences in expectations for economic growth have a major impact on long-term gas demand and prices (see Table 2.3~: · Higher or lower economic growth would cause gas demand to go up or down from the reference by about 1 Tcf in 2010 and by 2.5 to 3 Tcf in 2025. · Higher economic growth would cause wellhead prices for natural gas in the year 2025 to increase by about 15 percent, from $3.90 to $4.50/ Mcf (in constant 2001 dollars)
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From page 28... ...
These advances have enabled the industry to access new natural gas supplies from geologically complex unconventional gas resources and deep offshore waters while keeping costs lower than they otherwise would have been. The analysis shows that a relatively modest change in the rate of technological progress, from the current trends imbedded in the reference case, would have significant impacts on future natural gas prices and demand (see Table 2.4 and Figure 2.9~.
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From page 29... ...
Reference Rapid Technology -- -- -- -- 6 5 4 3 2 1O- t<~ Natural Gas Net Imports in 2025 (Tcf ) EEL Pipeline Liquefied Natural Gas l 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 History Projections FIGURE 2.9 Natural gas production, consumption, and imports for 1970 to 2025 in trillion cubic feet as a function of technological progress.
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From page 30... ...
· The analysis shows that a 25 percent lower-than-expected U.S. natural gas resource base, due potentially to smaller or less accessible tight gas sand resources, would increase gas prices in 2025 by nearly $1.00/Mcf (see Figure 2.10)
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From page 33... ...
The essential question is whether the expectations of moderate natural gas prices of $3.50/Mcf and the strong annual natural gas demand of 30 Tcf in the next decade can be realized. Considerable debate exists with respect to future industrial gas demand, competition among fuels in the electric power market, and the maturity and size of the remaining natural gas resource base.
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