American Oil and Gas Reporter - December 2021 - 40

SpecialReport: Natural Gas White Papers
Improved Fundamentals
This year's Winter Outlook forecasts
upward price pressure from generally improved
economic activity and from domestic
storage inventories that are moderately
below historic averages. Price pressures
from the wintertime weather forecast and
TABLE 1
Bcf/d
Summary of Winter Supply and Demand Forecast
Winter 21-22
Winter 20-21
SUPPLY
Lower-48 production
Net Canadian imports
LNG imports
Total supply
DEMAND
Power burn
Industrial
Residential/commercial
New Mexican exports
LNG exports
Total demand
STORAGE
Forecast daily withdrawal
WEATHER
Base case HDDs
FIGURE 1
U.S. LNG Export Capacity and Feed Gas Deliveries
Cameron
Sabine Pass
Elba Island
Calcasieu Pass
BCFD
14.00
12.00
10.00
8.00
6.00
4.00
2.00
-
Forecast
Cove Point
Freeport
Feedgas Deliveries
Corpus Christi
93.7
5.2
0.3
99.2
24.7
24.9
37.1
6.4
12.0
111.9
12.9
3,413
89.9
5.5
0.1
95.5
26.5
23.9
37.3
5.4
10.3
110.9
15.3
3,398
Three-Year Avg.
91.2
5.0
0.3
96.5
27.2
24.7
37.9
5.1
7.8
109.9
overall demand are neutral. The only downward
pressure point is supply, with U.S.
gas production expected to increase over
the winter months, particularly in nonassociated
(dry) gas shale plays (Table 1).
NGSA has issued market outlooks for
every winter heating season since 200102.
The U.S. and global gas markets have
evolved considerably over that period. Over
the past 10 years, domestic gas production
has increased by 40%, U.S. consumption
has grown by 22%, and total U.S. natural
gas exports are up more than three-fold,
thanks to liquefied natural gas exports.
The U.S. natural gas market became
significantly tighter last summer. Improved
fundamentals coupled with slow production
growth, strong spring and summer
demand-particularly for LNG-and escalated
supply concerns during the hurricane
season sent Henry Hub prices to their
highest late-summer levels in a decade.
While prices softened somewhat as the
heating season got underway in November,
NGSA's Outlook notes that they remain
considerably higher this year than at the
start of last winter.
Outside of the country, natural gas
prices in Europe and Asia hit all-time
highs in late summer and early autumn
as those markets attempted to secure
adequate supplies to replenish drawndown
storage inventories. A healthy rebound
in post-pandemic lockdown consumption
and unplanned production outages
across major supply countries
earlier this year slowed the refill of
global gas storage last spring and summer,
creating the storage imbalance as
the heating season approached.
The NGSA Outlook reports that the
demand pull from European and Asian
markets has kept U.S. LNG exports at
record levels, and coincides with new Gulf
Coast liquefication capacity entering service.
Expanded U.S. LNG exporting capacity
and improved Mexican downstream pipeline
utilization are expected to continue to result
in increased total export volumes, according
to the NGSA report. The U.S. Energy Information
Administration forecasts that
combined exports of LNG and natural gas
by pipeline will average 18.3 Bcf/d in
2021 and 19.3 Bcf/d in 2022. Our modeling
indicates that LNG exports will reach 12
Bcf/d in January and be sustained at the
level through the spring (Figure 1).
NGSA's 21st annual Winter Outlook
40 THE AMERICAN OIL & GAS REPORTER
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
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Jan-21
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Apr-22
American Oil and Gas Reporter - December 2021

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