U.S. shale gas plays continued to make a substantial contribution to the country’s natural gas production, the Energy Information Administration (EIA) said Tuesday in a report that cited supply gains last month. However, a declining rig count signals that production declines are on the way, the agency said.

Marketed U.S. natural gas production grew by 4.8 Bcf/d (7.9%) in 2011, EIA said in its Short Term Energy Outlook for July. “This strong growth was driven in large part by increases in shale gas production. EIA expects continued year-over-year growth in 2012, though not as strong as the previous year,” the agency said. The latest Outlook revises upward the forecast for marketed production for 2012, partially reflecting upward revisions to historical data for the first few months of the year.

EIA, however, expects a small drop in production in the coming months, reflecting a decline in active drilling rigs since last October. According to Baker Hughes, the natural gas rig count was 542 as of July 6, up slightly from the previous week, which was the lowest rig count since 1999, the agency noted.

EIA’s production survey indicates that natural gas marketed production fell between February and March but rebounded in April. Declining production from less-profitable dry gas plays such as the Haynesville Shale is offset by growth in production from liquids-rich production areas such as the Eagle Ford and wet areas of the Marcellus Shale, and associated gas from the growth in domestic crude oil production.

Although natural gas prices “remain at historically low levels,” producers should tip their hats to gas-fired power generators for doing their part to nudge demand up for the year, according to data released Tuesday by the Energy Information Administration (EIA).

EIA said gas consumption will average 69.9 Bcf/d in 2012, an increase of 3.3 Bcf/d (4.9%) from 2011 and an upward revision of 0.5 Bcf/d from June’s Outlook (see Shale Daily, June 13). EIA said it expects that large gains in power generator gas use this year will more than offset declines in residential and commercial use.

Power generator gas consumption is projected to grow 21% this year, mainly due to the cost advantage gas-fired plants enjoy over many coal-fired units, EIA said. “Consumption in the power sector peaks at 31.2 Bcf/d in the third quarter of 2012, when electricity demand for air conditioning is highest,” the agency said. “This compares with 27.7 Bcf/d during the third quarter of 2011.”

Power plants won’t be doing quite the same favor for gas producers next year as their consumption is projected to taper 1.9% from 2012 levels, although it will remain at “historically high levels in 2013,” EIA said. Overall, next year gas consumption growth will slow, averaging 71.1 Bcf/d, EIA said. What growth there is will be driven by increases in the residential, commercial and industrial sectors, the agency said. Producers can thank the expectation of near-normal weather for those increases, as residential consumption is projected to climb 7.7% and commercial by 4.5%.

Natural gas spot prices averaged $2.47/MMBtu at the Henry Hub in June, up 4 cents/MMBtu from May. Prices remain at historically low levels; the June 2012 price averaged 46% less than the June 2011 price. EIA expects the Henry Hub natural gas price will average $2.58/MMBtu in 2012, with modest monthly increases through the rest of the year. EIA expects 2013 prices will average $3.22/MMBtu.

The agency said it expects that pipeline gross imports will fall by 0.2 Bcf/d (2.6%) in 2012 as domestic supply continues to displace Canadian sources. The warm winter in the United States also added to the year-over-year decline in imports, particularly to the Northeast. EIA expects pipeline gross imports will increase by 2.2% in 2013, partially due to near-normal winter weather driving higher residential and commercial demand. Pipeline gross exports grew by 1.0 Bcf/d (33%) in 2011, driven by increased exports to Mexico, but are expected to remain flat in 2012 and grow by 0.2 Bcf/d in 2013.

Liquefied natural gas imports are expected to fall by 0.4 Bcf/d (44%) in 2012. EIA expects that an average of about 0.6 Bcf/d will arrive in the United States (mainly at the Elba Island terminal in Georgia) in 2012 and 2013, either to fulfill long-term contract obligations or to take advantage of temporarily high local prices due to cold snaps and supply disruptions.