The Energy Information Administration (EIA) in its Annual Energy Outlook (AEO) reports has tended to underestimate natural gas production and growth, and consequently overestimates net gas imports as well, the agency said in a report issued March 15.
In addition, natural gas has been the fuel with the largest absolute percentage difference between AEO projections and historical consumption.
“This can be partially traced to the performance of natural gas price projections,” according to EIA’s Annual Energy Outlook Retrospective Review. “In earlier projections, the natural gas price was influenced by the changes in the world oil price, but this relationship has decoupled since 2000. Through AEO2005 [see NGI, Dec. 13, 2004], the reference case has generally overestimated natural gas consumption, in part due to the tendency for significant underestimates of the natural gas wellhead price. In addition, industrial natural gas usage is highly sensitive to business cycles, leading to greater volatility in overall natural gas consumption.”
The Retrospective provides a yearly comparison between realized energy outcomes and the reference case projections included in previous editions of the AEO, which includes projections of energy production, consumption and prices.
“The projections in the AEO are not statements of what will happen but of what might happen, given assumptions and methodologies,” EIA said. “The AEO reference case projection assumes trends that are consistent with historical and current market behavior, technological and demographic changes, and current laws and regulations.”
The underlying reasons for deviations between the AEO reference case projections and actual outcomes “are numerous and varied,” said EIA.
In its recently released AEO2013, EIA projected that natural gas production will continue to grow, with the industry increasingly serving the industrial and electric power sectors, as well as an expanding export market (see NGI, Dec. 10, 2012). In AEO2012, the agency projected that the United States would be a net exporter of natural gas in about nine years, thanks in large part to production from shale basins (see NGI, Jan. 30, 2012).
Demand projections in AEO2011 were too low, according to some critics of a recent study of the potential impacts of liquefied natural gas exports, which was based on the annual EIA report (see NGI, Dec. 20, 2010).
Â©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |