A new report from Navigant’s global Energy Practice, the North American Natural Gas Market Outlook, Year-End 2014, examines the state of the natural gas industry and provides forecasts for supply and demand through 2035.
Driven by ongoing gas shale growth in the Northeast, production of natural gas in the United States continued its strong growth trajectory in 2014, increasing by 6.1 billion cubic feet per day, or 9.2%, over the course of the year. More growth in gas production is expected in the future, particularly from the Marcellus shale formation, with the only possible constraint the rate of infrastructure development in the region.
“Supply side growth continues to drive most other aspects of the natural gas industry in North America,” said Gordon Pickering, director with Navigant’s Energy Practice. “As we explain in the Natural Gas Market Outlook, this strong supply basis is giving rise to a new chapter of the gas industry, with the culmination of a half decade of new LNG project development and the beginning of a new, global market for natural gas.”
The opening of this new market is signaled by the opening of new export capacity on the U.S. Gulf Coast, according to the Natural Gas Market Outlook. The opening of Sabine Pass will signify the point at which North America becomes connected to the global gas market for the first time in history—with truly global consequences for gas markets in North America and around the world. Those consequences will become fully apparent as more LNG export projects come online, the report concluded.
Other findings from the Natural Gas Market Outlook, Year-End 2014:
- Annual average natural gas prices at Henry Hub are expected to stabilize over the near to mid-term, and grow steadily over the long-term—albeit reaching only moderate levels compared to historical gas price levels seen earlier this century.
- Additional infrastructure in the Marcellus and Utica shale gas regions, coming online around 2017, is expected to relieve bottlenecks and allow stranded gas to move to market, enabling prices to recover to levels similar to the broader North American gas market.
- U.S. natural gas demand is expected to grow steadily through 2035, particularly for electricity generation, reaching around 90 Bcfd annually by 2035.
Developed by Navigant’s global Energy Practice, The North American Natural Gas Market Outlook, Year-End 2014 uses an integrated process and a full suite of commercial software and proprietary energy market models to analyze the electric and fossil fuel markets. Navigant’s natural gas and power models are based on key assumptions driving natural gas prices and consumption from gas-fired generation over the outlook period. The Outlook includes updated forecasts for natural gas prices, dry conventional and shale gas production, natural gas demand, and gas storage activity.