EIA's Natural Gas Outlook Through 2025

Caruso, Guy
Energy Information Administration, U.S. Department of Energy, Washington, DC

Domestic natural gas spot prices well above $5 per million Btu remain likely over the next few months if normal, or colder, weather prevails, especially with oil prices remaining at relatively high levels. Natural gas storage levels are now slightly above average and may move prices back down, if warm temperatures and weak heating demand occur later this winter, just as rising prices are possible if the weather becomes colder. In 2004, spot natural gas prices are expected to average just under $5 per million Btu, falling somewhat along with oil prices. In 2005, natural gas spot prices are projected to fall again to average $4.83 per million Btu in current dollars under the assumption that domestic and imported supply can continue to grow by about 1-1.5 percent per year.

The longer-term projections indicate that almost 9 trillion cubic feet of new supplies will be needed by 2025. At an average wellhead price of $4.40 per thousand cubic feet in 2002 dollars, LNG imports and Alaskan production are expected to provide important new sources of supply, while unconventional gas productions continue to increase. Net LNG imports are expected to increase by 4.6 trillion cubic feet from 2002 to 2025. By 2025 expansion is projected at the four existing terminals, along with construction of new LNG terminals in the Bahamas, along the East Coast, on the Gulf Coast, and in Baja California, Mexico. Economic conditions are expected to allow an Alaska pipeline to begin moving gas to the lower 48 States in 2018.