Navigant projects steady increase in natural gas prices

Navigant (NYSE: NCI) said June 10 that its newly-issued North American Natural Gas Market Outlook, Spring 2013 shows that the real Henry Hub average price will increase at an average rate of 2.9%, from $3.66/MMBtu in 2013, to $4.07/MMbtu by 2015, and reach $6.82/MMBtu by 2035.

U.S. natural gas demand will grow from 71.2 Bcfd in 2013 to 89.0 Bcfd by 2035, driven primarily by industrial growth in the near term, and electric generation growth over the longer term, Navigant added.

The U.S. shale production outlook for natural gas continues to be strong, growing from 28 Bcfd in 2013 to 56 Bcfd by 2035. In 2035, shale production is expected to represent 61% of total U.S. natural gas production.

LNG exports are expected to grow in the U.S. and Canada, reaching 6.8 Bcfd by 2020.

”High rates of supply growth are still evident in the market, which is somewhat surprising considering the relative flat growth in recent baseload demand,” said Gordon Pickering, a director with Navigant’s Energy Practice and author of the Outlook. “Given this market, and relatively low prices, we expect a near-term resurgence in demand led by the industrial sector, with additional growth extending for the full term of the forecast.”

According to the Spring 2013 Outlook, the market will see an increase in industrial consumption of approximately 4.0 Bcfd over the next four to five years, as well as more moderate demand growth in other sectors over the full term of the forecast.

  • In the near term, low natural gas prices will continue to increase coal-to-gas switching in the electric generation sector.
  • In the mid-term, LNG exports will begin to come online as supported by the U.S. Department of Energy’s recent second approval of a non-Free Trade export application: Order #3282 Granting Long Term Authorization to Export from the Freeport LNG facility on Quintana Island, Texas.
  • Over the long-term, gas demand will primarily be driven by increases in electric generation influenced by stable prices and energy policies that favors natural gas.

Overall, the Outlook projects demand increases and steady supply growth that will help to keep prices stable for the duration of the forecast, providing for a healthier and less volatile natural gas market than in years past, Navigant said.

Navigant is a specialized, global expert services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.