American Oil and Gas Reporter - December 2024 - 38

SpecialReport: Natural Gas White Papers
A Demand Story
The key takeaway in the NGSA forecast
is that the analysis is driven by solid
demand fundamentals based on two critical
underpinning elements:
· Ongoing incremental increases in
liquefied natural gas (LNG) exports and
increased usage in domestic industrial
and residential/commercial markets; and
· The expected first normal winter
weather in three years, stimulating residential
and commercial space heating
demand.
U.S. natural gas consumption continues
to set records by the year, growing by 6
trillion cubic feet annually over the past
decade, 10 Tcf/year over the past 20
years, and 16 Tcf/year to effectively
double over the past 40 years, according
to data from the U.S. Energy Information
Administration. Since 2020, consumption
has grown by more than 2.0 Tcf/year,
reaching 32.62 Tcf in 2023.
This long-term growth pattern shows
no signs of abating. EIA reports that
overall consumption continued to edge
upward through the first three quarters
of this year. The NGSA forecast parallels
this trajectory, projecting 5% winter-overwinter
growth to an average of 125.6 billion
cubic feet a day compared to 118.9
Bcf/d last winter and an average of 117.8
Bcf/d over the past three winters, led by
the residential/commercial, industrial, and
LNG exports market sectors (Figure 1).
Industrial and residential/commercial
demand are forecasted to reflect significantly
higher pulls, assuming heating degree days
FIGURE 1
Winter 2024-25 Demand Forecast by Sector
RES/COMM
+14%
40
25
35
30
20
15
10
5
RES/COMM
3YR AVG
WINTER 2023-2024 ACTUAL
WINTER 2024-2025 FORECAST
39.5
34.6
36.4
Source: Energy Ventures Analysis
38 THE AMERICAN OIL & GAS REPORTER
POWER SECTOR
30.6
32.3
31.1
INDUSTRIAL
25.5
23.7
24.4
POWER BURN
-4%
INDUSTRIAL
-4%
LNG EXPORTS
+5%
PIPED TO MEXICO
-3%
near the normal 10-year average. The big
year-over-year gain is largely because of
last winter's warmer-than-normal weather.
With rising demand expected to place upward
pressure on natural gas prices, gasfired
power demand could decrease compared
to last winter's numbers, and there
may be less short-term, economically motivated
switching from gas to coal.
At the same time, LNG exports are
expected to grow this winter driven by
competitively priced U.S. LNG availability
to European and Asian markets and the
potential start of commercial operations
at the new Plaquemines LNG facility by
the end of the new year.
LNG Exports
LNG exports are forecast to climb by
5% on a year-over-year basis during this
winter's heating season, growing from
13.9 Bcf/d to 14.8 Bcf/d thanks to expanding
U.S. liquefaction capacity and
strong demand in European and Asian
markets.
As of the end of the third quarter,
total European natural gas storage inventories
were 95% of capacity, well ahead
of regional goals and historical levels.
However, global geopolitical tensions are
driving bid support for European and
Asian natural gas prices, which translates
to the ongoing call on U.S. LNG.
European and Asian gas benchmarks
are trading at high levels relative to the
cost of delivered U.S LNG, and volumes
to both Europe and Asia are expected to
remain near U.S. export capacity as LNG
buyers seek replacement volumes and
winter progresses. A steady supply of
LNG from America will be essential to
maintaining reliability throughout the winter
months. Europe experienced its warmest
average temperatures in 175 years from
December 2023 to February 2024, but a
more typical winter this year could quickly
draw down EU storage levels.
Consequently, competitive prices and
healthy netbacks are expected to fuel a
thriving market for U.S. LNG. Buyers in
both European and Asian markets will
continue to compete to attract U.S. LNG,
especially if heating degree days average
normal or stronger-than-normal this winter
in those regions.
With the domestic LNG market continuing
to experience an era of tremendous
growth in export capacity, U.S.
feedgas demand is projected to average
14.5 Bcf/d this winter, which would be
an increase of ~0.75 Bcf/d on a yearover-year
basis. Figure 2 shows actual
and forecast U.S. LNG export capacity
versus feedgas deliveries from 2019
through the end of 2025.
The imminent commencement of the
Plaquemines LNG facility in Louisiana
will give the United Stated eight major
LNG export terminals. Sometime next
summer, Golden Pass is expected to become
the ninth such U.S. facility in operation.
Both Mexican and Canadian LNG
projects are scheduled to start up over the
next few years, which only support a
stronger North American LNG outlook
as new projects approach commercial online
dates across the continent.
Pipeline natural gas exports into Mexico
LNG IMPORTS
12.7
13.9
14.6
PIPED TO MEXICO
5.6
5.9
5.7
have been growing in recent years, and
reached a record level in 2024. U.S.
exports to Mexico are expected to average
5.75 Bcf/d during winter 2024-25, which
would essentially be flat from last winter's
average volume. However, more gains
are expected over the next few years with
the construction of new pipelines, LNG
terminals, gas-fired power plants, and industrial
demand gains in Mexico.
Industrial, Electric Sectors
According to the U.S. Federal Reserve,
domestic industrial capacity utilization
BILLION CUBIC FEET PER DAY (BCF/D)
American Oil and Gas Reporter - December 2024

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