Successfully reported this slideshow.

Policy Forum Series: Teller - The Changing Role of Natural Gas in the United States

924 views

Published on

Published in: Technology, Business
  • Be the first to comment

  • Be the first to like this

Policy Forum Series: Teller - The Changing Role of Natural Gas in the United States

  1. 1. The Changing Role of Natural Gas in the United States Environmental Initiative Katherine Teller, Energy Information Administration September 21, 2012 | St. Paul, MinnesotaU.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov
  2. 2. U.S. Energy Information Administration The U.S. Energy Information Administration (EIA) is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. EIA is the Nations premier source of energy information and, by law, its data, analyses, and forecasts are independent of approval by any other officer or employee of the U.S. Government.Katherine Teller, St. Paul, Minnesota, 2September 21, 2012
  3. 3. Overview•  Current natural gas markets and history•  Short-term outlook•  Long-term outlook•  QuestionsKatherine Teller, St. Paul, Minnesota,September 21, 2012 3
  4. 4. Current Natural Gas Markets•  The past several years have been characterized by high supply and relatively low prices.•  Contributing factors to low 2012 prices included strong supply and weak demand resulting from a very warm winter.•  Production has remained high despite lower prices.•  Use of natural gas for electric power generation has increased substantially.Katherine Teller, St. Paul, Minnesota,September 21, 2012 4
  5. 5. 0 2 4 6 8 10 12 14 16 Jan-02 Jun-02 Nov-02 Apr-03 Source: ReutersSeptember 21, 2012 Sep-03 dollars per MMBtu Feb-04 Jul-04 Dec-04Katherine Teller, St. Paul, Minnesota, May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 Natural Gas Prices, 2002 – 2012 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 5
  6. 6. Growth in shale production has driven strength in supply MMcf/d 30,000 25,000 20,000 15,000 10,000 5,000 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Barnett Woodford Fayetteville Haynesville Eagle Ford Marcellus OtherSource: Lippman ConsultingKatherine Teller, St. Paul, Minnesota,September 21, 2012 6
  7. 7. Natural Gas Prices, 2002 - 2012•  Prices have created an environment conducive to fuel- switching; ie, displacement of coal generation with natural gas.•  This has been particularly prevalent in the Southeast and Mid-Atlantic.•  Most of the current combined-cycle generation capacity was added between 2000 and 2010. These additions have been increasingly utilized over the past six years.Katherine Teller, St. Paul, Minnesota,September 21, 2012 7
  8. 8. Coal and Natural Gas-Fired Generation Were Equal in April Million megawatt hours200180160140120 Coal100 Natural Gas Nuclear 80 Hydro Other Renewables 60 40 20 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12Source: U.S. Energy Information Administration Katherine Teller, St. Paul, Minnesota, September 21, 2012 8
  9. 9. Short-Term OutlookKatherine Teller, St. Paul, Minnesota,September 21, 2012 9
  10. 10. Short-Term Outlook•  Natural gas prices rise to an average of $3.64 in 2013.•  Production remains flat over the forecast period.•  A more normal 2012-2013 winter implies higher residential and commercial consumption.•  Electric power consumption declines in 2013 as a result of higher prices.•  The storage injection season ends at 3,950 Bcf, a new record.Katherine Teller, St. Paul, Minnesota,September 21, 2012 10
  11. 11. Consumption by Sector, 2010 - 2013Source: CFTC, BloombergKatherine Teller, St. Paul, Minnesota,September 21, 2012 11
  12. 12. Short-Term Outlook•  The Short-Term Energy Outlook expects a decline of more than 2 Bcf/d in electric power consumption in 2013.•  The decline is related to projected increases in natural gas prices, which make the relative price of coal less expensive.•  The current STEO also predicts increases in coal-fired generation.•  Despite the decrease in 2013, natural gas-fired generation will be at historically high levels.Katherine Teller, St. Paul, Minnesota,September 21, 2012 12
  13. 13. Short-Term Outlook•  Commodity price forecasts are highly uncertain.•  EIA considers a number of factors when forecasting prices, including weather, economic environment, and inventory levels.Katherine Teller, St. Paul, Minnesota,September 21, 2012 13
  14. 14. Short-Term Outlook dollars per million btu 8 Historical spot price 7 STEO forecast price NYMEX futures price 6 95% NYMEX futures upper confidence interval 5 95% NYMEX futures lower confidence interval 4 3 2 1 0 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 Note: Confidence interval derived from options market information for the 5 trading days ending September 6, 2012. Intervals not calculated for months with sparse trading in near-the-money options contracts. Source: Short-Term Energy Outlook, September 2012Katherine Teller, St. Paul, Minnesota,September 21, 2012 14
  15. 15. Long-Term OutlookKatherine Teller, St. Paul, Minnesota,September 21, 2012 15
  16. 16. Long-Term Outlook•  The Annual Energy Outlook (AEO) projects out to 2035.•  The AEO reference case is a “business as usual” case that takes into account current policies and technologies.•  The AEO runs several side cases to account for uncertainties in policies, prices, and technology.Katherine Teller, St. Paul, Minnesota, 16September 21, 2012
  17. 17. Long-Term Outlook•  Production increases over the forecast period, with shale gas leading growth in production.•  Generation from natural gas increases, but coal remains the largest source of power generation.•  Prices rise generally, varying with economic changes and the cost of production.•  The U.S. becomes a net exporter of natural gas.Katherine Teller, St. Paul, Minnesota, 17September 21, 2012
  18. 18. Natural gas prices, 2009 - 2035 Dollars per MMBtu 9 8 7 6 5 4 3 2 1 0 Reference Case High EUR Low EURSource: Annual Energy Outlook 2012Katherine Teller, St. Paul, Minnesota,September 21, 2012 18
  19. 19. Electricity generation by fuel, 2010 and 2035 10% 14% 13% 15% 21% 20% 20% 21% 20% 24% 27% 20% 47% 43% 41% 39% 2010 Reference High EUR (High Shale) Low EUR (Low Shale) 2035 Coal Natural Gas Nuclear Power Renewable Sources Source: Annual Energy Outlook 2012Katherine Teller, St. Paul, Minnesota,September 21, 2012 19
  20. 20. Natural gas consumption is quite dispersed; electric power andindustrial use drives much of the future demand growthU.S. dry gas consumptiontrillion cubic feet per year History Projections3025 Electric 34% power 31%2015 32% Industrial* 33%10 13% 14% Commercial 5 3% 3% Transportation** 21% 17% Residential 0 2005 2010 2020 2030 2035*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel.Source: EIA, Annual Energy Outlook 2012Katherine Teller, St. Paul, Minnesota,September 21, 2012 20
  21. 21. For more informationU.S. Energy Information Administration home page | www.eia.govShort-Term Energy Outlook | www.eia.gov/steoAnnual Energy Outlook | www.eia.gov/aeoInternational Energy Outlook | www.eia.gov/ieoMonthly Energy Review | www.eia.gov/merEIA Information CenterInfoCtr@eia.gov (202) 586-8800Our average response time is within three 24-hour automated information line about EIAbusiness days. and frequently asked questions.Katherine Teller, St. Paul, Minnesota,September 21, 2012 21

×