Providing coverage of Alaska and northern Canada's oil and gas industry
February 2024

Vol. 29, No.6 Week of February 11, 2024

EIA cites record natural gas consumption

Agency estimates US crude oil production set 13.3 million bpd record in December, expected to average 13.49 million bpd in 2025

Kristen Nelson

Petroleum News

The U.S. Energy Information Administration said Feb. 6 that it estimates U.S. natural gas consumption reached 118 billion cubic feet per day in January, a new high which came in response to cold weather in the Lower 48.

"The cold weather last month sent us into record-setting natural gas consumption territory for a few days, but we expect less than average consumption going into February and March," said EIA Administrator Joe DeCarolis. "Any late-winter cold snaps could introduce significant volatility back into the natural gas market," he added.

EIA said the natural gas usage was driven by the electric power sector. Overall, the agency said, it is forecasting a 5% increase in first quarter 2024 consumption, compared to the first quarter of 2023, which, the agency said, was one of the warmest first quarters on record.

US Natural gas

While natural gas consumption in January was up, EIA said in its January Short-Term Energy Outlook, mid-January cold weather disruptions in the central U.S. caused dry natural gas production to fall from 106 bcf per day in December -- a monthly record -- to 102 bcf per day in January. Production is forecast to average 105 bcf per day in February as weather-related disruptions subside, and to stay close to that average for the rest of the year.

For all of 2024, dry natural gas production is forecast to average 104 bcf per day, increasing in 2025 to average more than 106 bcf per day.

Natural gas prices were also impacted by weather, the agency said.

The Henry Hub spot price averaged $3.18 per million British thermal units in January but spiked to $13.20 per million Btu on Jan. 12 in anticipation of cold weather in the coming days. Prices fell quickly and continued down until Jan. 23, hitting a low for the month of $2.15 per million Btu.

EIA said it is forecasting that mild weather for the remainder of the first quarter will keep the average price near $2.40 per million Btu during February and March but warned that short term cold weather could result in volatility in the spot price.

U.S. liquefied natural gas exports averaged 11.8 bcf per day in 2023 and are forecast to average 12.1 bcf per day this year, rising to 14.4 bcf per day in 2025.

US crude

EIA is estimating that U.S. crude oil production averaged more than 13.3 million barrels per day in December, an all-time high. For January, however, production is estimated to have fallen to 12.6 million bpd because of cold weather related shut-ins. EIA said it is forecasting that production will return to almost 13.3 million bpd in February, then decreasing slightly through the middle of the year, and is not expected to exceed the December record until February of 2025.

U.S. crude oil production averaged 12.93 million bpd in 2023, is forecast to average 13.1 million bpd this year, rising to 13.49 million bpd in 2025.

The Brent spot price averaged $80 per barrel in January, EIA said, attributing that average to "heightened uncertainty about global oil shipments as attacks to vessels in the Red Sea intensified." The agency expects oil prices to rise to the mid-$80s in coming months, with downward pressure in the second quarter "as global oil inventories generally increase through the rest of our forecast."

Middle East supply disruptions could cause prices to rise higher than forecast, EIA said.

Brent averaged $82 per barrel in 2023 and the agency is forecasting the same for this year, with a decrease to $79 in 2025.

Electricity generation

EIA said natural gas accounts for 42% of U.S. electricity generation -- a percentage which the agency sees as constant across 2023, 2024 and 2025.

Coal, which accounted for 17% of generation last year, is forecast to drop to 15% this year and to 14% in 2025.

Renewables make up the difference, accounting for 22% in 2023, rising to 24% this year and 26% in 2025, while nuclear holds steady at 19% across the three years.

EIA said the U.S. electric power sector is expected to generate 43% more electricity for solar this year compared to last, with wind generation expect to grow 6%. "Capacity additions support this strong growth in renewable generation in 2024," the agency said.

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