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Navigant Releases New Outlook On North American Natural Gas Market Prices

Stocks in this article: NCI

Navigant’s (NYSE: NCI) Energy practice has issued its North American Natural Gas Market Outlook, Fall 2013 (Outlook), including updated forecast data on natural gas prices, dry conventional gas and shale gas production, natural gas demand and gas storage activity.

According to the updated forecast, the real Henry Hub average price is expected to return to above $5/MMBtu after 2020 and reach $6.93/MMBtu by 2035 1.

Navigant’s analysis projects:

  • North American consumer natural gas demand is expected to increase from 77.8 Bcfd in 2013 to 108.7 Bcfd in 2035.
  • North American dry natural gas production is expected to grow by 44 percent from 87.3 Bcfd in 2013 to 124.5 Bcfd in 2035.
  • LNG exports are expected to grow in North America, reaching up to 7.8 Bcfd by 2022.

“Five years after the first significant effects of gas shale in the U.S., the North American market is still being driven by fundamental gas supply and production growth,” says Gordon Pickering, a director with Navigant’s Energy Practice and author of the Outlook. “Looking forward, the market is expected to be largely influenced by abundant, even surplus supply in the short- and mid-term, then evolve over the longer term into a market that is fully connected to the global natural gas market. The global connection will result from both the rapidly developing North American natural gas liquefaction sector and natural gas exports to anxiously waiting markets, particularly in Europe and in Asia.”

According to the Outlook, total North American natural gas consumption for gas-fired generation and industrial use are projected to grow at an average annual rate of 3.7 percent and 2.4 percent respectively through 2020. In the near term, North American natural gas prices are projected to recover from 2012 lows, but will stay at moderate price levels. In the mid-term, Henry Hub prices are expected to rise to more than $5/MMBtu as a result of a combination of factors including increased gas-fired power generation, higher natural gas consumption for industrial use and a number of LNG export projects coming online. Over the long-term, natural gas prices are projected to continue the upward trend, albeit at a slower rate. Overall, the Outlook projects natural gas prices in North America will stabilize, demonstrating less volatility over the long-term, and helping to support a healthier market environment for both producers and end consumers.

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