NGSA forecasts relatively stable natural gas prices this winter
US natural gas prices could be relatively stable this winter because of a sluggish economy, production from ample supplies, and strong storage levels, the Natural Gas Supply Association said in its annual forecast.
US natural gas prices could be relatively stable this winter because of a sluggish economy, production from ample supplies, and strong storage levels, the Natural Gas Supply Association said in its annual forecast. “This year, we see the weather as the most influential factor,” NGSA Pres. R. Skip Horvath said, adding, “Of course, it’s also the most difficult to predict.”
NGSA, which released its forecast during the US Energy Association’s annual energy supply forum on Oct. 4, said demand from residential and commercial customers could modestly decrease relative to the 2010-11 heating season, which was the coldest in 10 years, because of the National Oceanic and Atmospheric Administration’s forecast for comparatively warmer temperatures.
“If the winter turns out to be colder than NOAA’s forecast, the demand picture could be considerably stronger,” Horvath said.
Figures developed for NGSA by Energy Development Analysis Inc. of Arlington, Va., suggested that demand from customers less sensitive to weather will stay level or grow modestly, the trade association said. Industrial demand is expected to be comparable to last winter, while demand to generate electricity could modestly increase as more utilities switch from coal-fired systems, it indicated.
“Last winter, we witnessed a doubling of fuel switching to natural gas and we expect to see fuel switching continue at last winter’s historic levels this winter,” said Horvath. “Not only has coal-to-gas switching continued for an unprecedented three straight years, but published [New York Mercantile Exchange] prices suggest that it will continue through 2014.”
Production will increase about 5% year-to-year to a record 63 bcfd, driven by onshore activity in shale plays, according to the analysis that ICF Energy of Fairfax, Va., developed for NGSA. It forecast that 2011 production in the Lower 48 will be 22.5 tcf, about 6.3% more than in 2010.
“This is a much higher annual production increase than was the case in recent years,” ICF’s analysis said. “Going forward into next year, we are forecasting a 3.8% increase, primarily reflecting a modest gas well completion slowdown for the remainder of 2011 and 2012.”
Contact Nick Snow at email@example.com.