A growing industrial sector and record-high export activity are expected to be key drivers of increased U.S. natural gas demand this winter, according to a leading trade group.

Liquefied natural gas (LNG) exports are expected to grow by 16% over last winter, while pipeline exports to Mexico are expected to get an 18% boost, the Natural Gas Supply Association (NGSA) said in its annual winter outlook released Thursday. Combined, the increases are expected to boost exports by 2.7 Bcf/d compared with last winter.

Energy Venture Analysis (EVA), which prepared the report for NGSA, said LNG exports would remain a primary driver of domestic natural gas demand growth in this decade. The firm expects LNG feed gas deliveries to average 12.0 Bcf/d this winter, up 1.7 Bcf/d over last year. 

Industrial growth, meanwhile, is expected to grow by 1 Bcf/d this winter compared with last year as newbuild facilities and capacity expansions come online in natural gas-intensive sectors such as petrochemicals. According to the NGSA, 22 major gas-intensive projects are planned from 2021 to 2024.

“The fundamentals in NGSA’s outlook show strong demand for natural gas at home and globally,” said NGSAA Chairman David Attwood, who is a vice president at ExxonMobil. 

Including exports, customer demand for U.S. natural gas is expected to increase to 111.9 Bcf/d compared with 110.9 Bcf/d last winter. However, the domestic market is predicted to shrink by 1.4 Bcf/d compared with last winter, driven by a decline in electric demand. NGSA expects the that market for natural gas will shrink by 2 Bcf due to “less temporary ‘economic switching’ to natural gas-fired power.” 

Meanwhile, weather is not expected to be a huge factor this year. The report’s authors predict this winter will be 1% colder than last year, meaning residential and commercial demand will likely stay the same.

Is Natural Gas Supply Growing?

On the supply side, production is expected to grow by a modest 4%, reflecting an increased rig count and well completion rate. NGSA is predicting a 3.7 Bcf/d increase in natural gas production over last winter. Overall supply, which also takes into account storage and LNG and Canadian pipeline imports, is expected to average just over 99 Bcf/d this winter.

NGSA is also predicting higher Henry Hub prices this winter compared with last year’s $3.09/MMBtu average. The trade group credited “a combination of strong economic growth, growing demand for natural gas, resurgent production, and decreased storage inventory,” for the forecast.