- The U.S. became the world's biggest LNG supplier in 2023, ahead of Australia and Qatar
- US dry natural gas production dropped to 102 bcfd (Jan 2024) from 106 bcfd (Dec 2023)
- By 2025, production is anticipated to climb over 106 Bcf/d
In January, US natural gas production dropped to 102 billion cubic feet per day (Bcf/d) from December's record of 106 Bcf/d due to bad weather. The Energy Information Administration (EIA) expects it to recover soon, hitting 105 Bcf/d by March. The EIA's outlook for 2024 predicts an average production of about 104 Bcf/d, slightly down from the earlier forecast of 105 Bcf/d. By 2025, production is anticipated to climb over 106 Bcf/d.
”We forecast that mild weather for the remainder of 1Q24 will keep the average Henry Hub spot price near $2.40/mmBtu during February and March. But volatility could return if severely cold weather emerges, even for a short period,” the EIA said.
Last month saw a record consumption of 118 Bcf/d in the US, mainly because of high demand from the electricity sector. Even with the expected milder weather in February and March, the EIA predicts a 5% increase in first-quarter consumption compared to the warm early months of 2023.
As for the natural gas market, futures for March delivery dropped by 2.6% to $2.028 per million British thermal units. This decline comes as the market braces for potential colder weather forecasts later in the month, closely watching the $2 price level.
Supply and Demand
In February, gas production in the US Lower 48 states went up to an average of 105.4 billion cubic feet per day (bcfd) from 102.1 bcfd in January. This increase still didn't beat December's record of 106.3 bcfd.
Weather reports expect warmer temperatures in the Lower 48 states until February 13, turning to typical cold levels from February 15 to 21. Due to this expected cooler weather, gas demand in the US, including exports, is predicted to rise from 121.8 bcfd this week to 124.6 bcfd next week. This update changes earlier predictions, lowering this week's demand forecast and raising next week's.
Gas supply to major US LNG export facilities dropped to 13.6 bcfd in February from 13.9 bcfd in January, not reaching December's high of 14.7 bcfd. Analysts believe LNG feedgas volumes won't hit record levels again until the Freeport LNG facility is fully operational, expected by mid- to late February.
Drop in Renewables
The EIA predicts more solar and wind energy in 2024. Solar could go up by 43% and wind by 6%. But, they're expecting a bit less growth in renewable energy for 2025 due to fewer new projects recently.
Growth in energy from fossil fuels like natural gas and coal is slowing down. Natural gas growth is expected to be 2% in 2024, down from 7% in 2023. Coal use is likely to drop by 8%.
Hydropower is expected to rise by 7% in 2024 thanks to more water availability.
In Texas, especially with the Electric Reliability Council of Texas (ERCOT), there's a big expected jump in solar power by 90% and wind by 8% in 2024.
The Midwest might see a big drop in coal energy in 2024, but more natural gas energy should help balance things out. This shows how energy is changing, with less coal and more natural gas and renewables.
