LNG exports and consumption of natural gas for power generation will strongly influence North American gas markets and movements through 2030 but remain “critical uncertainties,” according to a new study.
The Canadian Energy Research Institute, in collaboration with ICF International, whatif? Technologies Inc., and Scenarios to Strategy Inc., projected gas market conditions under four sets of assumptions about LNG exports and gas demand for power generation.
With strong growth in both exports of LNG and gas use for power, gas production would be strongest among the four scenarios: increasing by 60% in the US and 30% in Canada. Most of the Canadian growth would be in British Columbia, associated with LNG exports from facilities on the Pacific Coast.
In that case, LNG exports from the Lower 48 rise each year to slightly above 9.59 bcfd in 2030 and from Canada follow the same pattern to just above 4.93 bcfd.
If gas use for power generation grows more slowly, Lower 48 LNG exports rise more rapidly but peak above 6.59 bcfd about 2024 before falling below 6.85 bcfd in 2030. Canadian LNG exports in this case peak above 4.93 bcfd in 2023 and fall to 3.29 bcfd in 2030.
Gas use for power generation rises in three of the four scenarios: to slightly more than 50 bcfd with high LNG and high power use, to slightly more than 40 bcfd with high power use but lower LNG exports, and to more than 30 bcfd with high LNG exports but lower power use.
Under a low-power, zero-LNG assumption, gas demand for power generation doesn’t exceed 20 bcfd after 2015.
Under the high-LNG/high power scenario, the Henry Hub gas price climbs above $6/MMbtu in 2017-18 and reaches nearly $8/MMbtu in 2030 (2010 money).
With LNG exports high but gas in power generation growing more slowly, the Henry Hub price reaches $6/MMbtu in 2021-22 and slides below $5/MMbtu toward the end of the forecast period.
If growth in gas use for power is strong but that of LNG exports low, the price exceeds $4/MMbtu about 2021 but never reaches $5/MMbtu, the study says.
The lowest production projection results from assumptions of no LNG exports and low growth in gas use for power. Under these conditions, the Henry Hub price remains below $4/MMbtu.
US gas production in the lowest case falls slightly through 2030 while Canadian output grows by 6% because of pipeline connections to New England and Chicago. Production from the Marcellus and other US shales must increase under these assumptions to counter declines elsewhere.
Under its two scenarios for high LNG exports, Canada becomes a net importer of pipeline gas from the US. With the lower assumptions about LNG exports, Canada remains a net exporter of pipeline gas to the Lower 48.