eia ' s latest forecast of pricing and supply for the winter eia predicts supply shortfall will linger through winter
the energy information administration said yesterday in its september
short - term energy outlook it is projecting natural gas prices at the wellhead
will increase by about 87 % this winter ( october - march ) compared to last
winter . residential prices for gas are expected to rise on average by 27 %
compared to last year . for the entire year , the average wellhead price for
natural gas is projected to be $ 3 . 40 / mcf , the highest annual wellhead price
on record ( in inflation - adjusted terms , it would be the highest annual
average price since 1985 ) .
the short - term supply constraints that are currently hindering the industry ' s
ability to meet storage and power generation demand at the same time are
likely to continue into the heating season , eia said . storage levels could
end up being about 8 % below the five - year average of about 3 , 000 bcf by the
start of winter if net injections continue at 10 % below historically average
rates through the remainder of the refill season .
the effects of increased drilling for gas are not expected to appear in the
form of significantly increased production until after the next heating
season , according to the agency ' s report .
" for now , we are continuing to maintain a conservative view of possible
increases in domestic gas production for 2000 and 2001 , with assumed
increases of 0 . 5 % and 1 % , respectively , for this year and next . . . , " the eia
report stated . " on the other hand , the u . s . natural gas rig count on aug . 25
was at a recent high of 794 rigs . exploration and production budgets for many
natural gas producers are expected to increase sharply in 2000 and 2001 ,
spurred by higher prices and greatly improved current and expected revenues
from producing assets . also on the positive side , data from the texas
railroad commission suggest that , through may , year 2000 gas production
increased , if only slightly ( 0 . 4 % ) . this signifies a turnaround ( however
modest ) in a key producing region . very high gas drilling rates , including a
record - setting pace in deep offshore gulf of mexico , confirm that
increasingly positive results for domestic gas production are under way . "
imports are projected to rise by about 12 % next year primarily because of the
1 . 35 bcf / d alliance pipeline coming on line next month .
meanwhile the demand outlook remains bullish at 4 . 2 % annual growth . in 2001 ,
however , the forecast has been revised downward to 2 . 5 % growth because of
higher than expected natural gas prices . the industrial sector is the leading
sector for demand increases in 2000 at 9 . 3 % , while electric utility demand is
expected to decline by 4 . 0 % primarily because of power plant sales . for the
power generation sector as a whole , gas demand is expected to grow 6 . 5 % this
year and 1 . 5 % in 2001 . eia said the reduced growth rate next year is largely
due to the reversal in relative prices of fuel oil and natural gas , which
began in august , with fuel oil gaining the price advantage as gas prices
continued to rise .
gas demand this winter is expected to be up by 5 . 7 % compared to last winter
if weather is normal . normal weather implies a 12 % rise in heating
degree - days compared with last winter .
eia ' s latest forecast of pricing and supply for the winter
eia predicts supply shortfall will linger through winter
the energy information administration said yesterday in its september
short - term energy outlook it is projecting natural gas prices at the wellhead
will increase by about 87 % this winter ( october - march ) compared to last
winter . residential prices for gas are expected to rise on average by 27 %
compared to last year . for the entire year , the average wellhead price for
natural gas is projected to be $ 3 . 40 / mcf , the highest annual wellhead price
on record ( in inflation - adjusted terms , it would be the highest annual
average price since 1985 ) .
the short - term supply constraints that are currently hindering the industry ' s
ability to meet storage and power generation demand at the same time are
likely to continue into the heating season , eia said . storage levels could
end up being about 8 % below the five - year average of about 3 , 000 bcf by the
start of winter if net injections continue at 10 % below historically average
rates through the remainder of the refill season .
the effects of increased drilling for gas are not expected to appear in the
form of significantly increased production until after the next heating
season , according to the agency ' s report .
" for now , we are continuing to maintain a conservative view of possible
increases in domestic gas production for 2000 and 2001 , with assumed
increases of 0 . 5 % and 1 % , respectively , for this year and next . . . , " the eia
report stated . " on the other hand , the u . s . natural gas rig count on aug . 25
was at a recent high of 794 rigs . exploration and production budgets for many
natural gas producers are expected to increase sharply in 2000 and 2001 ,
spurred by higher prices and greatly improved current and expected revenues
from producing assets . also on the positive side , data from the texas
railroad commission suggest that , through may , year 2000 gas production
increased , if only slightly ( 0 . 4 % ) . this signifies a turnaround ( however
modest ) in a key producing region . very high gas drilling rates , including a
record - setting pace in deep offshore gulf of mexico , confirm that
increasingly positive results for domestic gas production are under way . "
imports are projected to rise by about 12 % next year primarily because of the
1 . 35 bcf / d alliance pipeline coming on line next month .
meanwhile the demand outlook remains bullish at 4 . 2 % annual growth . in 2001 ,
however , the forecast has been revised downward to 2 . 5 % growth because of
higher than expected natural gas prices . the industrial sector is the leading
sector for demand increases in 2000 at 9 . 3 % , while electric utility demand is
expected to decline by 4 . 0 % primarily because of power plant sales . for the
power generation sector as a whole , gas demand is expected to grow 6 . 5 % this
year and 1 . 5 % in 2001 . eia said the reduced growth rate next year is largely
due to the reversal in relative prices of fuel oil and natural gas , which
began in august , with fuel oil gaining the price advantage as gas prices
continued to rise .
gas demand this winter is expected to be up by 5 . 7 % compared to last winter
if weather is normal . normal weather implies a 12 % rise in heating
degree - days compared with last winter .