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EIA trims outlook for U.S. natural gas wellhead price

Jan. 29, 1996

The Energy Information Administration's annual forecast holds a much dimmer outlook for natural gas prices in the U.S. EIA projected an average $2.15/Mcf price in 1994 dollars at the wellhead for 2010, compared with an estimate of nearly $3.50 released in January 1995. It also forecast an average wellhead price of $2.57/Mcf in 2015. EIA explained the lower price projections reflect higher assessments of the U.S. resource base for gas, lower drilling costs, and greater average gas

The Energy Information Administration's annual forecast holds a much dimmer outlook for natural gas prices in the U.S.

EIA projected an average $2.15/Mcf price in 1994 dollars at the wellhead for 2010, compared with an estimate of nearly $3.50 released in January 1995. It also forecast an average wellhead price of $2.57/Mcf in 2015.

EIA explained the lower price projections reflect higher assessments of the U.S. resource base for gas, lower drilling costs, and greater average gas discoveries per well.

The American Gas Association said EIA's lower estimates were a more realistic assessment of the market.

Michael Baly, AGA president and chief executive officer, said, "EIA's gas price forecasts have been too high for years and have hampered efforts to increase the use of natural gas.

"We are gratified that EIA has recognized that its previous projections did not reflect the true ability of the gas industry to bring gas to customers at very competitive prices."

Other predictions

EIA also predicted a 32% reduction in nuclear power generation by 2015, assuming that about 40% of current capacity will be retired by then. It said, "Use of coal and natural gas for electricity generation increases to fill the gap and to meet growing electricity demand."

The agency lowered its forecast of the average price of coal at the minemouth to $17.43/ton in 2010 compared with last year's $23.30 forecast.

Electricity prices also are lower than in last year's forecast and remain essentially flat, due in part to lower prices for fuels used to generate electricity.

EIA assumed increased oil production from members of the Organization of Petroleum Exporting Countries. As a result, its latest estimate of $23.70/bbl in 2010 is about $1/bbl lower than last year's projection. The price is forecast at $25.43/bbl in 2015.

EIA said despite lower prices, total energy consumption in 2010 remains about the same as in last year's forecast. "Technology improvements and slower projected growth in some energy-intensive industries restrain the rate of increase."