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EIA Report Confirms Rising Gas Consumption, Declining Production Trend

U.S. consumers used 3.67 Tcf more natural gas in 2004 than was produced domestically in that year, according to a new report issued by the Energy Information Administration (EIA) last Monday.

Residential, commercial and industrial customers consumed 22.43 Tcf of natural gas last year, the latest year for which statistics are available, while production of U.S. dry gas was only 18.76 Tcf, the Department of Energy (DOE) agency said in its "Natural Gas Annual 2004." Consumption rose 0.15 Tcf over the level in 2003, while domestic dry production in 2004 fell 0.34 Tcf over the year-earlier period.

Total supply available to the U.S. in 2004 grew to 26.99 Tcf, up modestly from 26.96 Tcf in the prior year, once gas pipeline imports, liquefied natural gas (LNG) imports, storage withdrawals and other supplemental sources were factored in, the EIA said.

The largest consuming states were California (2.42 Tcf annually), Florida, (733.9 Bcf), Illinois (956.2 Bcf), Louisiana (1.28 Tcf), Michigan (916.53 Bcf), New York (1.10 Tcf), Ohio (824.4 Bcf) and Texas (3.92 Tcf). Certain states such as California, Florida, Illinois, Michigan and New York, consumed far more gas than they produced. California alone accounted for 10.8% of total gas consumption, but only 1.83% of production. Other states -- such as Alaska, Colorado, New Mexico, Oklahoma, Texas, Louisiana and Wyoming -- contributed more to the national gas supply than they consumed. Texas, for example, represented 17.46% of overall consumption, but contributed more than one-fourth of the nation's dry gas production.

The EIA said the average citygate price for natural gas in 2004 was $6.65/Mcf, up from $5.85/Mcf the previous year. Delivered prices for residential customers averaged $10.75/Mcf, commercial ($9.41), industrial ($6.56) and electric power ($6.11).

The report revealed a sizable drop in gas production from the waters of the Gulf Coast states and the federal waters of the Gulf of Mexico. It noted that offshore output, which was pegged at 5.70 Tcf in 2000, had slipped to 4.74 Tcf last year. The majority of the gas production (4 Tcf) came from the federal Gulf waters, according to the EIA.

Despite the drop in onshore and offshore gas output, the agency reported that the number of active wells climbed to 405,048 in 2004 from 393,327 in the previous year.

On the import front, the EIA estimated that the United States received about 4.26 Tcf of gas imports last year, up from 3.94 Tcf in 2003. Of the 2004 total, the agency said the largest amount (3.6 Tcf) came from pipeline imports from Canada and Mexico, while imports of LNG accounted for a small portion (652 Bcf), up from 506.5 Bcf in 2003. It noted that net imports accounted for nearly 16% of overall gas consumption in 2004.

At the same time, U.S. exports of natural gas and LNG to Canada, Mexico and Japan climbed steadily since 2000, hitting 854 Bcf in 2004 compared to 680 Bcf in the previous year. The EIA noted that the average price for gas pipeline imports ($5.80/Mcf) was slightly below the average price of LNG imports ($5.82/Mcf), while the reverse was true for the average price of exports.

The bulk of the U.S. LNG imports came from Trinidad in 2004 (462 Bcf), the EIA said. Dominion's Cove Point LNG terminal in Maryland received the highest volume of shipments (209.3 Bcf) from foreign countries in 2004, and was followed by Distrigas of Massachusetts' terminal in Everett, MA (173.8 Bcf), Trunkline LNG's terminal in Lake Charles, LA (163.7 Bcf) and El Paso's Elba Island terminal in Georgia (105 Bcf), it noted.

The EIA estimated that the U.S. had 8.26 Tcf of underground natural gas storage capacity at the end of 2004. States with the highest levels of gas storage capacity included Illinois (982 Bcf), Louisiana (594 Bcf), Michigan (1.01 Tcf), Ohio (572 Bcf), Pennsylvania (749 Bcf), Texas (674 Bcf) and West Virginia (512 Bcf).

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