U.S. Raises 2013 Natural Gas Production Forecast by 0.8%

The U.S. raised its natural-gas production outlook for 2013 for the first time in three months amid gains from onshore wells.

Marketed gas production will average a record 69.90 billion cubic feet a day this year, up from 69.33 billion estimated in April, the Energy Information Administration said in its monthly Short-Term Energy Outlook, released today in Washington. Output will rise to an all-time high for the sixth straight year as new wells come online at shale formations, such as the Marcellus in the Northeast, government data show.

Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.80 per million British thermal units, higher than the previous estimate of $3.52, according to the report from the EIA, the Energy Department’s statistical arm. The average may slump to $3.77 in the third quarter before climbing to $3.92 during the final three months of the year.

“The Henry Hub spot price averaged $4.17 per million Btu in April, the highest monthly average price since July 2011,” the EIA said. “Henry Hub spot prices will fall through September as natural gas markets loosen with lower summer demand. Going into the summer, EIA expects production to be slightly higher than last year’s levels, while summer electric power demand is projected to be lower than last year’s record- high levels.”

Gas output in the lower 48 states will average 64.77 billion cubic feet a day, up from last month’s estimate of 64.25 billion. The forecast for total gas consumption fell to 70.17 billion cubic feet a day from 70.28 billion.

Electricity Generation

Demand for gas from power plants will average 22.78 billion cubic feet a day this year, lower than the previous estimate of 22.95 billion. The estimate for daily industrial usage increased 0.8 percent to 19.79 billion cubic feet from 19.61 billion in April’s report.

LNG imports will average 410 million cubic feet a day this year, down from 450 million in the April forecast. The EIA said it expects LNG imports “to remain at minimal levels of less” of less than 500 million cubic feet a day through 2014.

Gas inventories at the end of October will total 3.796 trillion cubic feet, down 134 billion from the same time last year, according to the report. The number was revised up from 3.973 trillion the previous month.

Natural gas for June delivery fell 7.6 cents, or 1.9 percent, to $3.935 per million Btu at 12:59 p.m. on the New York Mercantile Exchange. Prices have gained 17 percent this year.

To contact the reporter on this story: Naureen S. Malik in New York at Nmalik28@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.