UPDATE 1-EIA sees U.S. 2016 natgas production, consumption at record highs

Tue Mar 8, 2016 1:04pm EST
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(Adds details on production, demand, coal and LNG)

March 8 (Reuters) - U.S. natural gas production in 2016 was expected to reach a record high of 79.68 billion cubic feet per day, down a shade from the 79.69 bcfd forecast last month, the U.S. Energy Information Administration said on Tuesday

The forecast would top 2015's all-time peak production of 79.13 bcfd and would be the sixth consecutive annual record high for U.S. gas production, according to the EIA's Short Term Energy Outlook (STEO) in March.

The EIA also forecast U.S. gas consumption would edge up to 76.79 bcfd in 2016 versus the 76.44 bcfd it forecast in February, due to increasing expectations of gas use by the electric power sector.

That would top the 2015 record high for gas demand of 75.38 bcfd and would be the seventh annual record high in a row.

For 2017, the agency forecast more record highs with production expected to rise to 81.36 bcfd and consumption growing to 77.31 bcfd.

In addition to power sector demand, the EIA also said gas consumption in 2016 and 2017 would rise as new fertilizer and chemicals projects that use gas as a feedstock come online.

The EIA forecast the growth of gas production in 2016 would slow to 0.9 percent from 5.4 percent in 2015 as low gas prices and declining rig activity begin to affect production. In 2017, however EIA expects production to grow by 2.1 percent as forecast gas prices rise, industrial demand grows and liquefied natural gas (LNG) exports increase.

That production growth will reduce demand for gas imports from Canada and support increasing exports to Mexico, the EIA said.   Continued...