EIA Raises 2023 Natural Gas Production Forecast

SEATTLE (Oil Monster): Driven by associated output from the Permian Basin, the Energy Information Administration (EIA) is raising its forecast for domestic natural gas production in 2023, according to updated projections.

EIA’s latest Short-Term Energy Outlook (STEO), published Tuesday, calls for U.S. natural gas production to average 100.4 Bcf/d next year, up from its month-earlier forecast for output of 99.7 Bcf/d.

“Although we continue to expect natural gas production in the Permian Basin to be limited early in 2023 by the lack of pipeline capacity to bring associated natural gas production to market, we expect these constraints will be resolved earlier than we had previously assumed,” researchers said. 

Domestic output is expected to average around 100 Bcf/d from December through March, down around 0.5 Bcf/d from November levels on potential weather-related disruptions, including freeze-offs, according to EIA. 

U.S. dry natural gas production in 2022 has surpassed pre-pandemic monthly records going back to 2019, with October and November output topping the 100 Bcf/d mark, researchers said. 

They pointed to the Permian and the Haynesville Shale as key drivers of the recent growth, catalyzed by increased natural gas pipeline capacity in those regions.

Meanwhile, Henry Hub spot prices are to average $6/MMBtu in 1Q2023 under the latest STEO projections, up from a November average of around $5.50.

“We expect natural gas prices will begin declining after January as U.S. storage levels move closer to the previous five-year average, largely as a result of rising U.S. natural gas production,” researchers said. “However, the possibility of price volatility remains high.”

Recent Nymex futures trading has January prices lagging the EIA’s 1Q2023 outlook as mild weather and strong production to close out the year have contributed to downward pressure on prices. The January contract settled below the $5.50 mark on Tuesday.

On the demand front, EIA said it expects U.S. LNG exports to reach a new record at close to 12.5 Bcf/d in March 2023, when it expects the Freeport export terminal to have resumed operations. 

For full-year 2023, U.S. liquefied natural gas exports are expected to average 12.3 Bcf/d, with facilities operating near capacity to meet demand from Europe and Asia, according to the STEO.

Courtesy:www.naturalgasintel.com