Natural Gas - Future Trends In The Gas Industry

In its 2004 publication Annual Energy Outlook 2004, the EIA projects energy supply, demand, and prices through 2025, predicting that natural gas production will increase steadily, as will consumption, pipeline expansion, and imports. Natural gas prices for residential customers are projected to rise by 9% from 2002 to 2025.

Domestic Production

Total domestic natural gas production is projected to increase from 2002 levels of 19.1 trillion cubic feet to 24 trillion cubic feet in 2025, with an annual growth rate of about 1%. Domestic production will be boosted by increases from onshore sources in the lower forty-eight states, slight offshore sources in the Gulf of Mexico, and significant increases resulting from the advent of North Slope gas pipeline operations in Alaska around 2018.

Figure 3.13 shows projected figures for different types of natural gas production. The letters "NA" and "AD" in Figure 3.13 stand for nonassociated (NA) and associated-dissolved (AD) natural gas. These terms refer to natural gas that is found in conjunction with crude oil (associated) or not in conjunction with crude oil (nonassociated). Associated-dissolved natural gas is found in a dissolved state with the oil, like oxygen dissolved in aquarium water. Unconventional sources of natural gas are those from which it is more difficult and less economically sound to extract natural gas because the technology to reach it has not been developed fully or is too expensive.

Domestic Consumption

The Annual Energy Outlook 2004 projects that consumption of natural gas will outpace production from 2002 to 2025. Total domestic natural gas consumption is projected to increase from 2002 levels of 22.8 trillion cubic

TABLE 3.3

Natural gas prices by sector, 1967–2003
(Dollars per thousand cubic feet)
	Residential¹			Commercial^1,2			Industrial^1,3			Vehicle fuel⁴		Electric power⁵
	Prices		Percentage of sector	Prices		Percentage of sector	Prices		Percentage of sector	Prices		Prices		Percentage of sector
Year	Nominal	Real⁶	Percentage of sector	Nominal	Real⁶	Percentage of sector	Nominal	Real⁶	Percentage of sector	Nominal	Real⁶	Nominal	Real⁶	Percentage of sector
¹Residential, commercial, and industrial prices do not include the price of natural gas delivered to consumers on behalf of third parties.
²Commercial sector, including commercial combined-heat-and-power (CHP) and commercial electricity-only plants.
³Industrial sector, including industrial combined-heat-and-power (CHP) and industrial electricity-only plants.
⁴Much of the natural gas delivered for vehicle fuel represents deliveries to fueling stations that are used primarily or exclusively by respondents' fleet vehicles. Thus, the prices are often those associated with the operation of fleet vehicles.
⁵Electricity-only and combined-heat-and-power (CHP) plants within the NAICS (North American Industry Classification System) 22 category whose primary business is to sell electricity, or electricity and heat, to the public. Through 2001, data are for electric utilities only; beginning in 2002, data are for electric utilities and independent power producers.
⁶In chained (2000) dollars, calculated by using gross domestic product implicit price deflators.
R = Revised.
P = Preliminary.
E = Estimate.
NA = Not available.
Notes: Prices are for natural gas, plus a small amount of supplemental gaseous fuels that cannot be identified separately. The average for each end-use sector is calculated by dividing the total value of the natural gas consumed by each sector by the total quantity consumed. Prices are intended to include all taxes.
Web Page: See http://www.eia.doe.gov/oil_gas/natural_gas/info_glance/natural_gas.html for related information.
SOURCE: "Table 6.8. Natural Gas Prices by Sector, 1967–2003 (Dollars per Thousand Cubic Feet)," in Annual Energy Review 2003, U.S. Department of Energy, Energy Information Administration, Office of Energy Markets and End Use, September 7, 2004, http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf (accessed September 28, 2004)
1967	1.04	^R4.35	NA	0.74	^R3.10	NA	0.34	^R1.42	NA	NA	NA	0.28	^R1.17	NA
1968	1.04	^R4.17	NA	0.73	^R2.93	NA	0.34	^R1.36	NA	NA	NA	0.22	^R0.88	NA
1969	1.05	^R4.02	NA	0.74	^R2.83	NA	0.35	^R1.34	NA	NA	NA	0.27	^R1.03	NA
1970	1.09	^R3.96	NA	0.77	^R2.80	NA	0.37	^R1.34	NA	NA	NA	0.29	^R1.05	NA
1971	1.15	^R3.98	NA	0.82	^R2.84	NA	0.41	^R1.42	NA	NA	NA	0.32	^R1.11	NA
1972	1.21	^R4.01	NA	0.88	^R2.92	NA	0.45	^R1.49	NA	NA	NA	0.34	^R1.13	NA
1973	1.29	^R4.05	NA	0.94	^R2.95	NA	0.50	^R1.57	NA	NA	NA	0.38	^R1.19	92.1
1974	1.43	^R4.12	NA	1.07	^R3.08	NA	0.67	^R1.93	NA	NA	NA	0.51	^R1.47	92.7
1975	1.71	^R4.50	NA	1.35	^R3.55	NA	0.96	^R2.53	NA	NA	NA	0.77	^R2.03	96.1
1976	1.98	^R4.93	NA	1.64	^R4.08	NA	1.24	^R3.08	NA	NA	NA	1.06	^R2.64	96.2
1977	2.35	^R5.50	NA	2.04	^R4.77	NA	1.50	^R3.51	NA	NA	NA	1.32	^R3.09	97.1
1978	2.56	^R5.59	NA	2.23	^R4.87	NA	1.70	^R3.72	NA	NA	NA	1.48	^R3.23	98.0
1979	2.98	^R6.01	NA	2.73	^R5.51	NA	1.99	^R4.02	NA	NA	NA	1.81	^R3.65	96.1
1980	3.68	^R6.81	NA	3.39	^R6.27	NA	2.56	^R4.74	NA	NA	NA	2.27	^R4.20	96.9
1981	4.29	^R7.26	NA	4.00	^R6.77	NA	3.14	^R5.31	NA	NA	NA	2.89	^R4.89	97.6
1982	5.17	^R8.24	NA	4.82	^R7.68	NA	3.87	^R6.17	85.1	NA	NA	3.48	^R5.55	92.6
1983	6.06	^R9.29	NA	5.59	^R8.57	NA	4.18	^R6.41	80.7	NA	NA	3.58	^R5.49	93.9
1984	6.12	^R9.05	NA	5.55	^R8.20	NA	4.22	^R6.24	74.7	NA	NA	3.70	^R5.47	94.4
1985	6.12	^R8.78	NA	5.50	^R7.89	NA	3.95	^R5.67	68.8	NA	NA	3.55	^R5.09	94.0
1986	5.83	^R8.18	NA	5.08	^R7.13	NA	3.23	^R4.53	59.8	NA	NA	2.43	^R3.41	91.7
1987	5.54	^R7.57	NA	4.77	^R6.52	93.1	2.94	^R4.02	47.4	NA	NA	2.32	^R3.17	91.6
1988	5.47	^R7.23	NA	4.63	^R6.12	90.7	2.95	^R3.90	42.6	NA	NA	2.33	^R3.08	89.6
1989	5.64	^R7.18	99.9	4.74	^R6.03	89.1	2.96	^R3.77	36.9	NA	NA	2.43	^R3.09	88.6
1990	5.80	^R7.11	99.3	4.83	^R5.92	86.6	2.93	^R3.59	35.2	3.39	^R4.15	2.38	^R2.92	89.2
1991	5.82	^R6.89	99.2	4.81	^R5.70	85.1	2.69	^R3.19	32.7	3.96	^R4.69	2.18	^R2.58	93.2
1992	5.89	^R6.82	99.1	4.88	^R5.65	83.2	2.84	^R3.29	30.3	4.05	^R4.69	2.36	^R2.73	93.2
1993	6.16	^R6.97	99.1	5.22	^R5.91	83.9	3.07	^R3.47	29.7	4.27	^R4.83	2.61	^R2.95	93.4
1994	6.41	^R7.10	99.1	5.44	^R6.03	79.3	3.05	^R3.38	25.5	4.11	^R4.55	2.28	^R2.53	93.5
1995	6.06	^R6.58	99.1	5.05	^R5.48	76.7	2.71	^R2.94	24.5	3.98	^R4.32	2.02	^R2.19	92.0
1996	6.34	^R6.76	99.1	5.40	^R5.75	77.6	3.42	^R3.64	19.4	4.34	^R4.62	2.69	^R2.87	92.2
1997	6.94	^R7.27	98.8	5.80	^R6.08	70.8	3.59	^R3.76	18.1	4.44	^R4.65	2.78	^R2.91	91.0
1998	6.82	^R7.07	97.7	5.48	^R5.68	67.0	3.14	^R3.25	16.1	4.59	^R4.76	2.40	^R2.49	82.5
1999	6.69	^R6.84	95.2	5.33	^R5.45	66.1	3.12	^R3.19	18.8	4.34	^R4.43	2.62	^R2.68	75.3
2000	7.76	^R7.76	92.6	6.59	^R6.59	^R63.9	4.45	^R4.45	19.8	5.54	^R5.54	4.38	^R4.38	64.3
2001	^R9.63	^R9.41	^R92.4	8.43	^R8.23	^R66.0	^R5.24	^R5.12	^R20.8	6.60	^R6.45	4.61	^R4.50	41.9
2002	^R7.91	^R7.61	^R91.4	^R6.64	^R6.39	^R78.4	^R4.02	^R3.87	^R22.5	^R4.74	^R4.56	^5,R3.68	^5,R3.54	⁵81.1
2003	^P9.50	^P8.99	^E92.1	^P8.26	^P7.82	^P77.2	^P5.78	^P5.47	^P22.2	NA	NA	^P5.57	^P5.27	^P83.6

FIGURE 3.11

feet to 31.4 trillion cubic feet in 2025, with an annual growth rate of 1.4%. Demand for natural gas by industrial consumers is expected to account for approximately 33% of total consumption in 2025, electricity producers 30%, residential 19%, and commercial 13%. (See Figure 3.14.) Natural gas will be called upon to replace the nation's aging nuclear electricity plants because of its efficiency and low emissions. To meet growing demand, natural gas pipeline capacity will have to be expanded, particularly along the corridors that move Canadian supplies to the Pacific Coast and the corridors that move Pacific Coast Canadian imports and Gulf of Mexico offshore natural gas to the East. A new pipeline from the North Slope in Alaska is expected to be constructed well before 2025.

Imports and Exports

Net imports of natural gas are projected to increase to meet demand, from 3.5 trillion cubic feet in 2002 to 7.2 trillion cubic feet in 2025. Most of these imports will come from Canada. (See Figure 3.15.) The rest will be shipped to the United States from Algeria, Australia, Indonesia, Nigeria, Oman, Qatar, Trinidad, and the United Arab Emirates in the form of liquefied natural gas. Natural gas exports to Mexico are expected to continue and to peak in 2006 (shown as an import minus value in Figure 3.15.) After that time exports to Mexico are expected to decline; Mexico's own natural gas infrastructure should be developed by 2015, and it is expected to begin meeting its own natural gas needs.

TABLE 3.4

World dry natural gas production, 1993–2002
(Trillion cubic feet)
Region and country	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002^P
R = Revised.
P = Preliminary.
Note: Totals may not equal sum of components due to independent rounding.
Web Page: For related information, see http://www.eia.doe.gov/international.
SOURCE: "Table 11.11. World Dry Natural Gas Production, 1993–2002 (Trillion Cubic Feet)," in Annual Energy Review 2003, U.S. Department of Energy, Energy Information Administration, Office of Energy Markets and End Use, September 7, 2004, http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf (accessed September 28, 2004)
North, Central, and South America	26.26	27.50	27.74	28.39	28.75	29.39	29.53	30.39	^R31.17	30.65
Argentina	0.76	0.79	0.88	0.94	0.97	1.04	1.22	1.32	1.31	1.28
Canada	4.91	5.27	5.60	5.71	5.76	5.98	6.26	6.47	6.60	6.63
Mexico	0.95	0.97	0.96	1.06	1.17	1.27	1.29	1.31	1.30	1.33
United States	18.10	18.82	18.60	18.85	18.90	19.02	18.83	19.18	^R19.62	18.96
Venezuela	0.82	0.88	0.89	0.96	0.99	1.11	0.95	0.96	1.12	1.05
Other	0.73	0.78	0.81	0.86	0.96	0.96	0.98	1.15	^R1.22	1.39
Western Europe	8.33	8.44	8.80	10.09	9.71	9.64	9.92	10.19	^R10.27	10.55
Germany	0.68	0.70	0.74	0.80	0.79	0.77	0.82	0.78	^R0.79	0.79
Italy	0.69	0.73	0.72	0.71	0.68	0.67	0.62	0.59	^R0.54	0.51
Netherlands	3.11	2.95	2.98	3.37	2.99	2.84	2.67	2.56	2.75	2.66
Norway	0.97	1.04	1.08	1.45	1.62	1.63	1.76	1.87	^R1.95	2.41
United Kingdom	2.31	2.47	2.67	3.18	3.03	3.14	3.49	3.83	^R3.69	3.61
Other	0.57	0.55	0.61	0.59	0.60	0.58	0.57	0.57	0.57	0.57
Eastern Europe and Former U.S.S.R.	27.99	26.47	25.93	26.28	24.85	25.17	25.41	26.22	26.48	27.05
Romania	0.75	0.69	0.68	0.63	0.61	0.52	0.50	0.48	0.51	0.47
Russia	21.81	21.45	21.01	21.23	20.17	20.87	20.83	20.63	20.51	21.03
Turkmenistan	2.29	1.26	1.14	1.31	0.90	0.47	0.79	1.64	1.70	1.89
Ukraine	0.68	0.64	0.62	0.64	0.64	0.64	0.63	0.64	0.64	0.65
Uzbekistan	1.59	1.67	1.70	1.70	1.74	1.94	1.96	1.99	2.23	2.04
Other	0.87	0.76	0.79	0.76	0.79	0.74	0.70	0.84	0.89	0.97
Middle East and Africa	7.24	7.41	7.99	8.76	9.74	10.30	10.95	12.01	^R12.61	13.41
Algeria	1.90	1.81	2.05	2.19	2.43	2.60	2.88	2.94	^R2.79	2.80
Egypt	0.40	0.42	0.44	0.47	0.48	0.49	0.52	0.65	^R0.87	0.94
Iran	0.96	1.12	1.25	1.42	1.66	1.77	2.04	2.13	^R2.33	2.65
Qatar	0.48	0.48	0.48	0.48	0.61	0.69	0.78	1.03	^R0.95	1.04
Saudi Arabia	1.27	1.33	1.34	1.46	1.60	1.65	1.63	1.76	1.90	2.00
United Arab Emirates	0.94	0.91	1.11	1.19	1.28	1.31	1.34	1.36	^R1.39	1.53
Other	1.30	1.34	1.33	1.53	1.67	1.79	1.76	2.15	^R2.39	2.45
Asia and Oceania	6.55	7.11	7.50	8.13	8.47	8.55	9.10	9.48	^R9.92	10.55
Australia	0.86	0.93	1.03	1.06	1.06	1.10	1.10	1.16	^R1.19	1.26
China	0.56	0.59	0.60	0.67	0.75	0.78	0.85	0.96	1.07	1.15
India	0.53	0.59	0.63	0.70	0.72	0.76	0.75	0.79	^R0.85	0.88
Indonesia	1.97	2.21	2.24	2.35	2.37	2.27	2.51	2.36	^R2.34	2.48
Malaysia	0.88	0.92	1.02	1.23	1.36	1.37	1.42	1.50	^R1.66	1.71
Pakistan	0.58	0.63	0.65	0.70	0.70	0.71	0.78	0.86	^R0.77	0.81
Other	1.16	1.23	1.33	1.42	1.52	1.56	1.69	1.86	2.04	2.25
World	76.36	76.93	77.96	81.65	81.52	83.03	84.91	88.28	^R90.45	92.20

FIGURE 3.12

FIGURE 3.13

FIGURE 3.14

FIGURE 3.15

Natural Gas - Future Trends In The Gas Industry

Domestic Production

Domestic Consumption

Imports and Exports

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