Forecasts Point to Higher U.S. Gas Production and Consumption

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Among other things, the steady increase in U.S. exports of liquefied natural gas is leading to heightened demand. Production too is on the rise, however.

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Keep On Keepin' On with U.S. Natural Gas

Total inland U.S. natural gas production on Tuesday was up from year-ago levels, even with a skew in the data, while federal estimates point to record-levels for domestic output and demand.

A production sample from IIR Energy in its NATGAS Today report for Wednesday showed issues from Equitrans skewed production data after it reported zero volumes across its meters, though overall levels remain high. Total supply as of Tuesday was around 114.6 billion cubic feet, up 2.49 billion cubic feet from the same period last year.

According to Industrial Info Resources data, there are 142 active capital projects in the U.S. that are related to gas production worth US$31.2 billion.

The Gulf Coast is emerging as a natural gas powerhouse, where regional production of around 33.5 billion cubic feet per day (Bcf/d) this week marked a 13.6% increase from year-ago levels. As regional oil basins such as the Permian mature, well pressures change and allow for lighter molecules associated with natural gas to escape subsurface pores, while heavier, oil-related compounds get stuck behind.

In a monthly market report published Tuesday, the U.S. Energy Information Administration said it expected total natural gas production to increase by 3.3% from year-ago levels to reach a record of 122.3 billion cubic feet per day (Bcf/d.)

"This upward revision is almost entirely the result of higher associated natural gas in the Permian region than we had previously expected," analysts wrote.

An early-year report from the Interstate Natural Gas Association of America (INGAA) outlined a need for as much as 140,000 miles of new transmission and gathering pipelines for natural gas over the next 25 years to keep pace with production growth across North America.

Targa Resources Corporation is already advancing its Apex Pipeline in Texas, which is designed to send around 2 Bcf/d some 563 miles from the Permian Basin to downstream facilities on the Gulf Coast. The Industrial Info Resources Global Market Intelligence (GMI) Project Database offers a detailed project report.

"We also expect natural gas production growth in the Haynesville region, where production is more directly tied to natural gas prices and demand from U.S. Gulf Coast LNG export facilities," EIA analysts wrote. "Together, these regions produce enough natural gas to keep inventories above the five-year average and limit upward pressure on Henry Hub prices."

Splendid Isolation?

Domestic natural gas markets are largely insulated from the conflict in the Middle East, which has shuttered production of liquefied natural gas (LNG) from Qatar, a world leader in exports. Henry Hub, the U.S. benchmark for the wholesale price of natural gas, should barely move, with second-half prices expected to average around $3.34 per million British thermal units, compared to $3.23 for Tuesday.

Markets, however, may be getting tight in the United States, even with expectations of future growth.

"Rising crude oil prices drive crude oil production higher in our forecast, which results in growth in associated natural gas production," the EIA's report read. "However, rising natural gas demand next year for electricity generation and ongoing growth in U.S. natural gas exports put upward pressure on natural gas prices in the second half of 2027."

The United States is the world leader in LNG exports, and a handful of new projects--from the floating Delfin LNG facility offshore Louisiana to Port Arthur in Texas--are only expected to solidify that position. Gross exports of gas in the liquid form are expected to average 17.2 Bcf/d this year, an 18% increase over year-ago levels.

By the Numbers

• 18% year-over-year increase in LNG exports to 2026
• 25-year midstream growth spurt may be needed to keep pace

Key Takeaways

• Power, LNG pull on U.S. natural gas supplies.
• Production could set records

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).