The Energy Information Administration (EIA) on Wednesday lifted its forecast on Henry Hub natural gas spot prices for 2010 from a month ago, expecting them now to average $4.70/MMBtu, which is 75 cents above 2009's average price and 22 cents more than government forecasters predicted in June.
Most of the jump in gas prices is expected to occur from now through September "due to projections of increased hurricane activity in the Gulf of Mexico this season, which helped push spot prices higher," EIA stated in its Short Term Energy Outlook.
Henry Hub spot prices in 2011 now are forecast by EIA to average $5.17/MMBtu, which is 11 cents higher than in its June outlook.
U.S. Gulf of Mexico (GOM) gas output is forecast to fall by around 10% this year and in 2011 "as a result of hurricane outages, the announced offshore drilling moratorium and the decline in active drilling rigs over the last four years," EIA said.
The estimated median outcome for hurricane outages from June through November is a cumulative 166 Bcf this year, compared with 19 Bcf in 2009.
The offshore drilling moratorium, imposed by the government in late May, is projected to reduce GOM gas output by an average of 0.05 Bcf/d "for the last six months of 2010 and 0.25 Bcf/d for 2011."
Lower 48 onshore gas production is seen increasing by 2 Bcf/d (3.8%) this year and 0.2 Bcf/d (0.3%) in 2011, forecasters said.
Imports of liquefied natural gas (LNG) now are predicted by EIA to average 1.37 Bcf/d in 2010, which is down by about 0.14 Bcf/d from the June forecast.
Projected LNG imports, however, are forecast to increase to 1.52 Bcf/d in 2011.
"While imports are expected to grow, higher prices in European and Asian markets will likely divert LNG cargoes from the United States," EIA said.
Gross pipeline imports are expected to be 8.8 Bcf/d this year, which would be a decrease of almost 3% from 2009. In 2011 EIA expects gross pipeline imports to average around 8.2 Bcf/d.
This month's outlook also revised downward EIA's projections for oil production resulting from the deepwater drilling moratorium.
According to EIA, the drop in crude oil output from the moratorium, expected to last at least six months, is estimated to average about 31,000 b/d in the last three months of this year, compared with an estimated average of 26,000 b/d forecast last month. Crude output also is forecast to fall by about 82,000 b/d in 2011, which is up from an earlier prediction of 70,000 b/d.
Government analysts said they would continue to refine the estimated moratorium impacts as information is available.
West Texas Intermediate spot crude prices, which ended in June near $76/bbl, are seen averaging $79/bbl over the second half of this year, rising to $83/bbl in 2011. The EIA oil price forecast is unchanged from June.
Annual average residential electricity prices were revised "only moderately" from a month ago, and now are expected to average 11.6 cents/kWh in 2010, up from 11.5 cents in 2009. In 2011 prices are seen averaging around 12 cents/kWh.
Meanwhile, estimated U.S. carbon dioxide emissions from fossil fuels, which fell 7% in 2009, now are forecast to increase by 3.2% this year and 1.6% in 2010 "as economic growth spurs higher energy consumption."
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