Energy consulting firm ScottMadden’s recently released Energy Industry Update finds that with the advance of shale gas, prices in the natural gas market have shifted from shortage to surplus. However, many expect a step change in 2015–2016 as demand from power generation and LNG exports picks up.
Credit Suisse estimates base case LNG exports of 8.5 BCF/day, while Macquarie sees cumulative natural gas demand growth of 18 BCF/day by year-end 2018 over current 65 BCF/day, more than 25 percent annually. Continued strong demand is expected from industrial customers including petrochemicals, finds ScottMadden.
Observers say that Henry Hub may be waning as the benchmark for Eastern US gas prices for power generation and end use. Increasingly, supply/demand dynamics are reversing, with Northeast US supply and Gulf Coast demand.
Production growth is expected to expand in 2014 despite still-low prices.