NEW YORK (Dow Jones)--Total natural gas consumption in the U.S. is expected to increase 5% in 2007 amid increases in residential and commercial use, but a return to near-normal weather in 2008 means prices will increase by only 1.1% next year, according to the U.S. Energy Information Administration.
A weaker U.S. dollar and global demand for natural-gas-intensive goods produced domestically will help increase natural gas consumption by 0.8% in the industrial sector in 2008, despite a project 0.7% decline in 2007, the EIA said Tuesday in its monthly Short-Term Energy Outlook.
Total U.S. marketed natural gas production is expected to rise by 2.1% in 2007 and by 1.6% in 2008, although a portion of the 2007 increase will be offset by a 1.7% decline in Gulf of Mexico production in 2007, the EIA said. But in 2008, new deepwater supply infrastructure in the Gulf, such as Anadarko Petroleum Corp.'s (APC) Independence Hub, and ongoing efforts to develop unconventional reserves are expected to increase Gulf of Mexico and continental U.S. onshore production by 5.1% and 1%, respectively.
Imports of liquefied natural gas are expected to increase this year and next year, rising by 790 billion cubic feet, or 35%, in 2007, and about 940 bcf, or 19%, in 2008 over the previous year. But low U.S. gas prices, along with the risk of project delays and production shortfalls, could limit LNG cargoes to the U.S., according to the EIA.
Spot natural gas prices at the benchmark Henry Hub in Louisiana are projected to reach a winter peak of $8.22/Mcf in January 2008. On an annual basis, the Henry Hub spot price is expected to average about $7.43/Mcf in 2007 and $7.78/Mcf in 2008, the EIA said.