Natural gas marketed production in the U.S. is forecast to decline this year, for the first time since 2005, according to the Energy Information Administration.
Production is forecast to average 77.3 billion cubic feet per day in 2016, a 1.4 Bcf/d decline from the 2015 level, EIA said in its latest Short-Term Energy Outlook.
EIA expects production to start rising in November as a result of increases in drilling activity and infrastructure build-out that connects natural gas production to demand centers. In 2017, forecast natural gas production increases by an average of 2.9 Bcf/d from the 2016 level.
In 2017, forecast natural gas production is expected to increase by an average of 2.9 Bcf/d from the 2016 level, the agency said in the report.
LNG boosts Henry Hub
Factors such as growing domestic natural gas consumption, along with higher pipeline exports to Mexico and liquefied natural gas (LNG) exports, are expected to contribute to higher Henry Hub natural gas spot price.
EIA said in the report it expects Henry Hub spot gas price to rise from an average of $2.50/million British thermal units (MMBtu) in 2016 to $3.12/MMBtu in 2017.
“NYMEX contract values for February 2017 delivery traded during the five-day period ending November 3 suggest that a price range from $2.01/MMBtu to $4.84/MMBtu encompasses the market expectation of Henry Hub natural gas prices in February 2017 at the 95% confidence level,” the agency said.