Continued growth in production of shale gas and recent discoveries in deep waters offshore is expected to increase domestic natural gas production through 2035 and will be reflected in the Energy Information Administration’s (EIA) next Annual Energy Outlook, which is due out in December, according to EIA Administrator Richard Newell.

“The energy outlook for natural gas has changed dramatically over the past several years,” Newell told the Natural Gas Roundtable in Washington, DC, Thursday. “The most significant story is the transformative role played by shale gas.”

EIA analysts will use “increased assumptions about the recoverable resource base for natural gas” when compiling their next long term forecast, EIA spokesman Jonathan Cogan told NGI’s Shale Daily.

“It’ll probably have an increase in the recoverable resource assumptions that we plug into our model,” Cogan said. “That sounds reasonable given the growth that we’ve seen.”

Under expected conditions the spot price for gas could jump from the current price of about $3.30/MMBtu to an average of about $4.60/MMBtu in 2011.

The outlook for prices depends on expectations about demand and supply fundamentals, which are in turn influenced by assumptions about the rate of improvement in exploration and production technologies, Newell said. Technology improvements, in addition to reducing drilling and operating costs and expanding the economically recoverable resource base, also affect the timing of production increases from sources such as shale gas.

Key factors influencing gas production and consumption over the next few years will be the pace of the economic recovery, the pace of innovation in unconventional gas development and public policy related to energy and the environment, Newell said.

Last year EIA said total domestic natural gas production would grow from 20.6 Tcf in 2008 to 23.3 Tcf in 2035 (see Daily GPI, Dec. 15, 2009). With technology improvements and rising prices, production from shale plays grows to 6 Tcf in 2035, more than offsetting declines in conventional production, according to EIA’s “Annual Energy Outlook 2010” reference case.