The Energy Information Administration (EIA) cut its domestic dry gas production numbers for 2003, 2004 and 2005 and raised its gas demand and gas price forecasts in its March Short Term Energy Outlook. However, the EIA still says domestic production grew 2.2% last year and will continue growing this year and next, by 1.2% and 1.1%, respectively, to about 19.81 Tcf in 2005.

“Natural gas production is expected to continue to expand through 2005 as natural gas well completions, which totaled an estimated 20,000 in 2003, continue to grow to between 22,000 and 23,000 wells per year over the next two years,” EIA said.

Nevertheless, the agency revised downward its domestic dry gas production numbers for the four years from 2001 through 2005. It also lowered its projections of net imports, which now are expected to decline rather than grow. LNG is seen growing this year and next to 750 Bcf in 2005, but net imports are expected to fall this year to 3.19 Tcf (down from 3.20 Tcf in 2003) and next year to 3.18 Tcf.

EIA’s total new supply numbers continue to show supply growth going forward but are down from last month’s forecast to 22.62 Tcf for 2003 (170 Bcf lower than what was reported in February), 22.85 Tcf for 2004 (down 220 Bcf) and 23.06 Tcf for 2005 (down 210 Bcf from the February outlook).

The EIA raised its industrial and total gas demand numbers for 2003, 2004 and 2005. Total demand is expected to rise 2.6% this year to 22.54 Tcf and rise again next year to 22.64 Tcf.

“In 2004, natural gas demand is expected to increase by about 2.6% due to growth in the economy, along with a somewhat lower projected annual average natural gas price,” EIA said. “Demand in 2005 is expected to increase by 0.4% as the economy continues to expand, with expected reductions in weather-related demand in the first quarter of 2005 relative to the first quarter of 2004, lessening the overall growth rate next year.”

Natural gas prices, meanwhile, are expected to fall about 6% this year to $5.19/Mcf (composite spot), but that forecast is up from last month’s prediction of $5.07 for this year. EIA also raised its forecast for next year to $5.17 from $5.12 in last month’s outlook.

EIA estimates this winter’s residential heating bills relative to the 2002-2003 will be up 12% for gas, 2% for oil, 7% for propane, and 2% for electricity.

Electricity demand in 2004 is expected to increase by 2%, driven by accelerated growth in the economy and weather-related increases in the first and the fourth quarters. In 2005, annual electricity demand is projected to grow by 1.8%, as the economic expansion continues.

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