natural gas markets: recent changes and key drivers
DESCRIPTION
Natural Gas Markets: Recent Changes and Key Drivers. for LDC Gas Forum September 11, 2012| Chicago, Il by Howard Gruenspecht, Deputy Administrator. U.S. Natural Gas Injection Season 1999-2012. Billion Cubic Feet. Source: U.S. Energy Information Administration Short Term Energy Outlook. - PowerPoint PPT PresentationTRANSCRIPT
www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis
Natural Gas Markets: Recent Changes and Key Drivers
for
LDC Gas Forum
September 11, 2012| Chicago, Il
by
Howard Gruenspecht, Deputy Administrator
U.S. Natural Gas Injection Season 1999-2012Billion Cubic Feet
Source: U.S. Energy Information Administration Short Term Energy Outlook
2Howard Gruenspecht, LDC Forum September 11, 2012
Natural Gas use for electric powerBillion cubic feet per day
Source: U.S. Energy Information Administration based on Bentek Energy, LLC
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U.S. Electricity Output from Natural Gas and Coal
Gigawatthours
Source: U.S. Energy Information Administration Electric Power Monthly
4Howard Gruenspecht, LDC Forum September 11, 2012
Electric Power Sector Natural Gas Consumption: Sept thru March
Billion cubic feet
Source: U.S. Energy Information Administration Short Term Energy Outlook
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Henry Hub Natural Gas Price
Dollars per million btu
Source: U.S. Energy Information Administration Short Term Energy Outlook
6Howard Gruenspecht, LDC Forum September 11, 2012
Probability of the December 2012 Henry Hub contract expiring above price levels
7
Source: U.S. Energy Information Administration, based on the CME Group
Howard Gruenspecht, LDC Forum September 11, 2012
September Probability Distributions of December Future Contracts With Actual Contract Prices Traded in September
Source: U.S. Energy Information Administration based on Bloomberg, LLC
8Howard Gruenspecht, LDC Forum September 11, 2012
Primary energy use by fuel, 1980-2035
9
U.S. energy consumption
quadrillion Btu
Source: EIA, Annual Energy Outlook 2012
ProjectionsHistory 2010
Other Renewables
Liquid biofuels
Petroleum and other liquids
Coal
Nuclear
Natural gas
21%
37%
9%
25%
2%
1%
20%
32%
9%
26%
6%4%
Share of total U.S. energy use
Howard Gruenspecht, LDC Forum September 11, 2012
Wind, solar, geothermal and biomass
5%
Technically recoverable dry gas resources
Howard Gruenspecht, LDC Forum September 11, 2012 10
U.S. dry gas resources
trillion cubic feet
*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.
Source: EIA, Annual Energy Outlook 2012
Domestic natural gas production grows faster than consumption
U.S. dry gas
trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2012
ProjectionsHistory 2010
Consumption
Domestic supply
Net imports
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273
482
1,460
Global spot natural gas and crude oil prices vary widely
Source: EIA based on Bloomberg as of 6/25/2012
Global spot natural gas and crude oil pricesU.S. dollars per million British thermal unit
12Howard Gruenspecht, LDC Forum September 11, 2012
2%
Shale gas offsets declines in other U.S. natural gas production sourcesU.S. dry gas production
trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2012
Non-associated offshore
ProjectionsHistory
Associated with oilCoalbed methane
Non-associated onshore
Shale gas
2010
10%
6%
9%
7%
21%
23%
9%
9%
6%
49%
Alaska 1%
Tight gas26%
22%
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Electric power and industrial use drives much of the future domestic natural gas demand growth in the Reference caseU.S. dry gas consumption
trillion cubic feet per year
*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel.
Source: EIA, Annual Energy Outlook 2012
ProjectionsHistory
Industrial*
Electricpower
Commercial
Residential
Transportation**
34%
17%
14%
32%
3%
31%
21%
13%
33%
3%
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U.S. production of shale gas in four cases, 2000-2035
15
dry natural gas production
trillion cubic feet
Source: EIA, Annual Energy Outlook 2012
Howard Gruenspecht, LDC Forum September 11, 2012
High EUR
Reference
Low EUR
High TRR
2010History Projections
Technically Recoverable Resource (TRR)Estimated Ultimate Recovery (EUR)
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lower-48 average natural gas wellhead price
2010 dollars per thousand cubic feet
Source: EIA, Annual Energy Outlook 2012
Natural gas price projections vary based on resource base assumptions
Low EUR
Reference
High EUR
ProjectionsHistory 2010
High TRR
Howard Gruenspecht, LDC Forum September 11, 2012
Operating costs: existing plants with and without a value on carbon
• The “crossover point” for least-cost dispatch of coal and natural gas capacity depends on both fuel prices and the carbon value. At lower natural gas prices, the “crossover” occurs at a lower carbon value.
• Environmental operating costs and retrofit costs for pollution controls at existing coal-fired plants can “raise the bar” for their continued operation.
– For retrofit decisions, the unit’s perceived “useful life,” which plays a critical role, can be affected by views regarding future climate policies
Coal at $3
Natural GasCC at $7
Natural Gas CC at $3
Natural GasCC at $4
2010 dollars per megawatthour
Fuel Cost for Existing Coal and Combined Cycle Natural Gas Units with a Value Placed on Carbon Dioxide Emissions
Coal at $2
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While electricity consumption grows by 21% over the projection, the annual rate of growth slowspercent growth (3-year rolling average)
Projections
HistoryPeriod Annual Growth1950s 9.81960s 7.31970s 4.71980s 2.91990s 2.42000-2010 1.02010-2035 0.8
Structural Change in Economy - Higher prices - Standards - Improved efficiency
2010
Source: EIA, Annual Energy Outlook 2012
18Howard Gruenspecht, LDC Forum September 11, 2012
18%
15%
Electricity mix gradually shifts to lower-carbon options, led by growth in renewables and natural gas electricity net generation
trillion kilowatthours per year
Source: EIA, Annual Energy Outlook 2012
2010
24%
20%
45%
10%
1%
38%
28%
1%
Nuclear
Oil and other liquids
Natural gas
Coal
Renewables
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The ratio of oil to natural gas prices remains high through 2035 in EIA’s AEO2012 Reference case projection
ratio of oil price to natural gas price
Source: EIA, Annual Energy Outlook 2012
History Projections2010
Oil and natural gas prices2010 dollars per million Btu
History Projections2010
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Howard Gruenspecht, LDC Forum September 11, 2012
For more information
Howard Gruenspecht August 28, 2012 21
U.S. Energy Information Administration home page | www.eia.gov
Today In Energy | www.eia.gov/todayinenergy
Short-Term Energy Outlook | www.eia.gov/steo
Annual Energy Outlook | www.eia.gov/aeo
Monthly Energy Review | www.eia.gov/mer
Howard Gruenspecht August 28, 2012
U.S. Energy Breakdown by Fuel and Sector
22
Source: EIA Annual Energy Review 2010
Underground sources of natural gas
Source: modified from U.S. Geological Survey Fact Sheet 0113-01.
23Howard Gruenspecht Washington, DC - May 16, 2011
Working Underground Natural Gas Storage Capacity Additions, 2008- 2011
Billion cubic feet
Source: U.S. Energy Information Administration Peak Underground Working Natural Gas Storage Capacity Report
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