Post on 09-Feb-2016
description
transcript
Energy Information Energy Information Administration’sAdministration’s
Natural Gas OutlookNatural Gas Outlook
Presented to:Kansas Corporation Commission
October 28, 2003
Presented by:William TrapmannEnergy Information Administration (EIA)william.trapmann@eia.doe.gov
www.eia.doe.gov
OutlineOutline
• Background on the natural gas industry and markets
• Natural gas supply and demand outlooks• Natural gas market outlook• Natural gas market impacts• Concluding remarks
BackgroundBackground
Natural Gas Spot Prices Natural Gas Spot Prices Continue to Be VolatileContinue to Be Volatile
(Dollars per MMBtu)(Dollars per MMBtu)
Source: Natural Gas Intelligence, Natural Gas Index
$0
$5
$10
$15
$201/
2/19
97
7/2/
1997
1/2/
1998
7/2/
1998
1/2/
1999
7/2/
1999
1/2/
2000
7/2/
2000
1/2/
2001
7/2/
2001
1/2/
2002
7/2/
2002
1/2/
2003
7/2/
2003
Henry Hub Daily Midpoint Price $18.85 on 2/25/03
Kansas national population and energy use rankings:Kansas national population and energy use rankings:Population – 32th (2002)Total per capita energy – 18th (2000)Natural Gas Consumption (2002)Natural Gas Consumption (2002)
Residential – 71,002 MMcfCommercial – 38,812 MMcfIndustrial – 105,400*Electric Power – 23,126 MMcf
Natural Gas Production (2002) – 450,801 MMcf
*Estimated.
Regional Fuel ProfileRegional Fuel Profile
Short-Term Outlook for Natural GasShort-Term Outlook for Natural Gas
• SUPPLY : Cautious Optimism because of the following expectations– Production increases in ’03 (result of strong drilling) – Net imports (including LNG) increase in 2004– Storage adequate at start of winter 2003 (3+ Tcf)
• CONSUMPTION : Little change in totals for 2003, 2004
• WELLHEAD PRICE: almost $5 per Mcf in 2003, decreasing $1 in 2004
• CONSUMER PRICES: higher this winter v. last; expect some relief starting in 2Q 2004
• CAVEAT: Extremes in market or weather conditions would change this outlook.
Natural Gas Supply OutlookNatural Gas Supply Outlook
Natural Gas Production Exhibits Natural Gas Production Exhibits Significant Decline RatesSignificant Decline Rates
Annual gas production replacement in the Gulf Coast Area, vintiged by year of completion, 1970-97. After Potential Gas Committee 1998, data from PI/Dwight’s.
Source: Advanced Resource International
$0
$2
$4
$6
$8
$10
$12
$1401
/02/
9804
/02/
9807
/01/
9809
/29/
9812
/28/
9803
/28/
9906
/26/
9909
/24/
9912
/23/
9903
/22/
0006
/20/
0009
/18/
0012
/17/
0003
/17/
0106
/15/
0109
/13/
0112
/12/
0103
/12/
0206
/10/
0209
/08/
0212
/07/
0203
/07/
0306
/05/
0309
/03/
03
Pric
e (D
olla
rs p
er M
MB
tu)
0
200
400
600
800
1000
1200
Num
ber o
f Rig
sNumber of Rigs Drillingfor Natural Gas
Weekly Henry Hub Spot Price
Source: Natural Gas Intelligence Weekly Gas Price Index, Baker-Hughes Weekly US Rig Report.
Gas Rigs Tend To Follow Spot Prices Gas Rigs Tend To Follow Spot Prices With A LagWith A Lag
U.S. Gas Production Is Expected to U.S. Gas Production Is Expected to Increase in 2003 and Taper in 2004Increase in 2003 and Taper in 2004
17.8 17.7 17.818.1
18.818.6
18.8 18.819.0
18.819.2
19.7
19.1
19.519.2
15
16
17
18
19
20
1990 1992 1994 1996 1998 2000 2002 2004
TCF
Sources: EIA, Short-Term Energy Outlook, October 2003
Notes: Includes LNG. Net Imports equal imports minus exports.
Sources: EIA, Short-Term Energy Outlook, October 2003
0
500
1,000
1,500
2,0002,500
3,000
3,500
4,000
4,500
5,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
BC
F
Imports Exports
Both Imports and Exports Are Expected Both Imports and Exports Are Expected To Increase Through 2004To Increase Through 2004
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
1997 1998 1999 2000 2001 2002 2003 2004
Bill
ion
Cub
ic F
eet
Pipeline LNG
Projections
Sources: History: EIA; Projections: Short-Term Energy Outlook October, 2003.
LNG Imports:2002: 229 Bcf2003: 540 Bcf2004: 640 Bcf
Natural Gas Import SourcesNatural Gas Import Sources
Natural Gas StorageNatural Gas Storage
Note: Aquifers in the Producing Region have been displayed as depleted oil/gas fields to preserve data confidentiality.
Consuming West Consuming East
Depleted FieldsSalt CavernsAquifers
Producing
Underground Natural Gas Storage Underground Natural Gas Storage Facilities in the Lower 48 StatesFacilities in the Lower 48 States
Working Gas in Underground Storage Working Gas in Underground Storage Compared with 5-Year RangeCompared with 5-Year Range
Sources: EIA, Short-Term Energy Outlook, October 2003
0
500
1000
1500
2000
2500
3000
3500
Jan-
02
May
-02
Sep-
02
Jan-
03
May
-03
Sep-
03
Jan-
04
May
-04
Sep-
04
Monthly
Bill
ion
Cub
ic F
eet
5-Yr Min/MaxRange
End-of-Month-Stocks
Projection
Natural Gas in Storage Entering Heating SeasonNatural Gas in Storage Entering Heating SeasonWill Be Within the Range of the Past Five YearsWill Be Within the Range of the Past Five Years
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Wor
king
Gas
in S
tora
ge(b
illio
n cu
bic
feet
)
Projection:3,086 Bcf
Storage Stocks as of End of October
Source: EIA data (1993-2002) and Short-Term Energy Outlook projection, October 2003 (2003).
Stocks at end of March
Refill Volumes
Natural Gas Demand OutlookNatural Gas Demand Outlook
Monthly Consumption, Production and Net ImportsMonthly Consumption, Production and Net Imports
0
10
20
30
40
50
60
70
80
90
Feb-
00
May
-00
Aug
-00
Nov
-00
Feb-
01
May
-01
Aug
-01
Nov
-01
Feb-
02
May
-02
Aug
-02
Nov
-02
Feb-
03
May
-03
Aug
-03
Nov
-03
Feb-
04
May
-04
Aug
-04
Nov
-04
Bcf
per
Day
0
10
20
30
40
50
60
70
80
90Consumption
Net Imports Production
ConsumptionTotalTcf
DailyBcf/d
2002 22.5 61.6
2003 22.3 61.1
2004 22.4 61.4
Projection
Source: EIA, Short-Term Energy Outlook, October 2003
Total Natural Gas Demand Is Total Natural Gas Demand Is Expected to Be Lower Than 2002Expected to Be Lower Than 2002
Sources: History: EIA; Projections: Short-Term Energy Outlook, October 2003.14
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Perc
ent C
hang
e
0
10
20
30
40
50
60
70
80
90
Bill
ion
Cub
ic F
eet p
er D
ay
Percent Change (Left Axis) Total (Right Axis)
History Projections
Natural Gas Market OutlookNatural Gas Market Outlook
Projections
*The confidence intervals show +/- 2 standard errors based on the properties of the model. The ranges do not include the effects of major supply disruptions.Sources: History: EIA; Projections: Short-Term Energy Outlook, October 2003.
0.0
1.0
2.0
3.0
4.0
5.0
6.07.0
8.0
9.0
10.0Ja
n-01
Mar
-01
May
-01
Jul-0
1Se
p-01
Nov
-01
Jan-
02M
ar-0
2M
ay-0
2Ju
l-02
Sep-
02N
ov-0
2Ja
n-03
Mar
-03
May
-03
Jul-0
3Se
p-03
Nov
-03
Jan-
04M
ar-0
4M
ay-0
4Ju
l-04
Sep-
04N
ov-0
4
Monthly
Dol
lars
per
Tho
usan
d C
ubic
Fee
t
Average Spot Price:about $5.30 /Mcf in 2003about $4.35 /Mcf in 2004
Natural Gas Spot Prices Are Expected to Range Natural Gas Spot Prices Are Expected to Range Between $4.30-$4.90 This Winter Between $4.30-$4.90 This Winter
(Base Case and 95% Confidence Interval*)(Base Case and 95% Confidence Interval*)
0
2
4
6
8
10
12
14
16
18
20
percent supply utilization rate
wel
lhea
d pr
ice
SD3
D3
D4
D4
More Inelastic Demand More Elastic Demand
percent supply utilization rate
SD1
D2
D1D2
0
2
4
6
8
10
12
14
16
18
20
80 82 83 85 87 89 90 92 94 96 97 99
wel
lhea
d pr
ice
Illustrative Supply and Demand CurvesIllustrative Supply and Demand Curves
Lower-48 States Effective Capacity Lower-48 States Effective Capacity Utilization and Gas Price (1987-2001)Utilization and Gas Price (1987-2001)
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
70 75 80 85 90 95 100Effective Capacity Utilization (Percent)
Gas
Pric
e (C
onst
ant 2
001
Dol
lars
per
Mcf
)
Kansas Seasonal Natural Gas Load Kansas Seasonal Natural Gas Load Patterns By Sector (MMcfd)Patterns By Sector (MMcfd)
0
100
200
300
400
500
600
Jan-0
1
Mar-01
May-01
Jul-0
1
Sep-01
Nov-01
Jan-0
2
Mar-02
May-02
Jul-0
2
Sep-02
Nov-02
Jan-0
3
Mar-03
May-03
0
100
200
300
400
500
600
Jan-0
1
Mar-01
May-01
Jul-0
1
Sep-01
Nov-01
Jan-02
Mar-02
May-02
Jul-0
2
Sep-02
Nov-02
Jan-0
3
Mar-03
May-03
0
100
200
300
400
500
600
Jan-0
1
Mar-01
May-01
Jul-0
1
Sep-01
Nov-01
Jan-0
2
Mar-02
May-02
Jul-0
2
Sep-02
Nov-02
Jan-0
3
Mar-03
May-03
Source: EIA.
0
100
200
300
400
500
600
Jan-0
1
Mar-01
May-01
Jul-0
1
Sep-01
Nov-01
Jan-0
2
Mar-02
May-02
Jul-0
2
Sep-02
Nov-02
Jan-0
3
Mar-03
May-03
Residential
Industrial
Commercial
Electric Power
Natural Gas Market ImpactsNatural Gas Market Impacts
Household Winter Heating Fuel SummaryHousehold Winter Heating Fuel Summary
Midwest 2000-01 2001-02 2002-03 2003-04Natural Gas Actual Actual Actual ForecastConsumption (Mcf) 99.1 81.3 95.2 91.8Avg. Price ($/Mcf) 9.52 7.38 8.39 9.17
Expenditures ($) 943 600 799 841
PropaneConsumption (gals) 979 803 941 907Avg. Price ($/gal) 1.38 1.11 1.20 1.21Expenditures ($) 1,348 888 1,125 1,094
Notes: Consumption based on typical per household use for the regions noted.Sources: History: EIA; Projections: Short-Term Energy Outlook October, 2003.
Base case demand lower; expenditure changes mixed.
*Gas-weighted heating degree-days
Heating Demand Indicators:Heating Demand Indicators:Probability Ranges for U.S. Degree-Days* Probability Ranges for U.S. Degree-Days*
This WinterThis Winter
Winter weather was colder than normal last year.
Sources: History: EIA; Projections: Short-Term Energy Outlook, October 2003.
0
200
400
600
800
1000
1200
Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04
Hea
ting
Deg
ree-
Day
s
–Normal
–Upper
–Lower
–2002-2003 Winter
Household Winter Heating Fuel SummaryHousehold Winter Heating Fuel Summary
Midwest 2002-03 Winter 2003-04 % Diff From BaseNatural Gas Winter Mild Normal Severe Mild SevereConsumption
(Mcf) 95.2 82.6 91.8 101.0 - 10% 10.0%Avg. Price ($/Mcf) 8.39 8.77 9.17 9.67 - 4.3% 5.5%
Expenditures ($) 799 724 841 977 - 13.9% 16.1%
PropaneConsumption
(gals) 971 816 907 998 - 10% 10.0%Avg. Price ($/gal) 1.20 1.13 1.21 1.30 - 6.6% 8.1%Expenditures ($) 1,125 920 1,094 1,301 - 15.9% 19.0%
Notes: Consumption based on typical per household use for the regions noted.Sources: History: EIA; Projections: Short-Term Energy Outlook October, 2003.
Severe weather = +16% to +19% cost increase for heating
Winter Weather Scenarios: Warm (Mild), Normal (Base) and Cold (Severe) Cases - Midwest
Wellhead prices remain high and vulnerable to spikes resulting from developments like severe weather or disruptions in supplies.
Storage is expected to exceed the 5-year average level by Nov 1.
LNG holds significant potential as a supply source.
Consumers will pay more for gas this winter compared with last. Rate reductions expected in 2004.
A substantial boost in supplies from production or imports will take time and may require additional infrastructure.
SummarySummary
www.eia.doe.gov