Drilling activity during the past month was “resilient” despite lower natural gas spot and futures prices, the Energy Information Administration (EIA) said in its Short-Term Energy Outlook for September.

“According to Baker Hughes, the Aug. 26 rig count had rebounded to 898 active drilling rigs targeting natural gas, up from 866 on May 20. If drilling continues to increase, production could grow more than expected in 2012,” the agency said in its outlook, which was released last Wednesday.

Marketed gas production is expected to climb to an average of 65.8 Bcf/d this year, up by 4 Bcf/d (6.4%) from 2010, the EIA said. “The majority of the growth is centered in the onshore production of the Lower 48 states, which will more than offset steep projected declines in the federal Gulf of Mexico [of 0.9 Bcf/d to 5.30 Bcf/d this year]. EIA expects that overall production will continue to grow in 2012, but at a slower pace, increasing 1.1 Bcf/d (1.7%) to an average of 66.9 Bcf/d.”

The EIA lowered the Henry Hub price forecast for this year by 4 cents to $4.20/MMBtu and reduced the 2012 forecast by 11 cents to $4.30/MMBtu. “The increase in price from 2011 to 2012 reflects some tightening in supply as production growth slows in 2012.”

The Henry Hub spot price averaged $4.05/MMBtu in August, 37 cents lower than the July average, according to the EIA.

The growing domestic gas production has reduced the nation’s reliance on gas imports and contributed to increased exports. The EIA sees pipeline gross imports of natural gas tumbling by 4.1% to 8.7 Bcf/d during the current year, and by another 3.8% to 8.4 Bcf/d in 2012, while pipeline gross exports to Mexico and Canada are expected to average 4.1 Bcf/d this year and 4.2 Bcf/d in 2012, compared with 3.1 Bcf/d in 2010. Projected U.S. imports of liquefied natural gas will likely fall to 1 Bcf/d in both this year and next from 1.2 Bcf/d in 2010.

The agency sees total gas consumption growing by 1.8% to 67.3 Bcf/d this year, with most of the growth coming in the industrial sector (to 18.5 Bcf/d) and power sector (to 20.7 Bcf/d). It projects that total gas demand will climb slightly to 67.7 Bcf/d in 2012.

Working natural gas in storage stood at 2,961 Bcf at the end of August, 137 Bcf below last year’s level in late August. EIA said it expects that inventories, though currently lower than those for the same period in 2010, will come close to last year’s level by the end of the injection season (late October), reaching 3.74 Tcf.

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