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EIA forecasts flat WTI 2012-13 at $106 Henry Hub natural gas spot prices at $2.18 per million Btu lowest average monthly since April 1999; down 32 cents from February Kristen Nelson Petroleum News
While the U.S. Energy Information Administration expects West Texas Intermediate crude oil prices to remain relatively flat through 2013, averaging about $106 per barrel, it expects Henry Hub spot prices for natural gas to rise in 2013 from the 2012 level. EIA said in its April 10 Short-Term Energy and Summer Fuels Outlook that the Henry Hub spot price for natural gas averaged $2.18 per million Btu in March, down 32 cents from February “and the lowest average monthly price since April 1999.”
The agency expects natural gas prices to average $2.51 per million Btu this year, rising to $3.40 in 2013. Both 2012 and 2013 price forecasts are down from the agency’s March forecast, which called for prices to average $3.17 this year and $3.96 next year.
“Prices remain low as production and supplies remain robust,” EIA said.
EIA projects the WTI price discount to average U.S. refiner acquisition cost to narrow from about $7 in the second quarter this year to about $4 per barrel by the fourth quarter of 2013, “as physical pipeline capacity constraints diminish.”
The U.S. refiner acquisition cost of crude oil is expected to average $112 per barrel this year and $110 per barrel in 2013.
Natural gas production, imports Total U.S. marketed natural gas production grew an estimated 4.8 billion cubic feet per day, 7.9 percent, in 2011, “the largest year-over-year volumetric increase in history,” EIA said, with the “strong growth driven in large part by increases in shale oil production.”
The agency said it expects year-over-year production growth to continue this year, but at a lower rate than in 2011, “as low prices reduce new drilling plans.”
EIA said Baker Hughes put the natural gas rig count at 647 on April 5, down from a high in mid-October last year of 936, a reduction which has not yet impacted production levels, “partly reflecting improved drilling efficiency.”
Fewer horizontal natural gas rigs in areas of dry production such as the Haynesville shale probably indicate declines in those areas, the agency said, losses which “are more than offset in the short term by other production from wet plays.”
Gross natural gas pipeline imports are expected to fall by 0.7 bcf a day this year, 7.2 percent, as domestic gas displaces Canadian sources, but EIA said the warm winter in the United States has also added to the decline in imports.
Pipeline gross exports grew by 1 bcf a day last year, primarily to Mexico, and are expected to grow at a slower rate this year and next.
Working natural gas inventories continue to set seasonal record highs due to the warm winter, with working inventories at 2,479 bcf on March 30, up 887 bcf from last year and 934 bcf above the five-year average.
U.S. crude production growing EIA expects crude oil production from areas outside the Organization for the Petroleum Exporting Countries, or OPEC, to increase by 850,000 barrels per day this year and a further 840,000 bpd in 2013, with North America the largest area of non-OPEC growth.
North American production increases are expected at 560,000 bpd this year and 180,000 bpd next year from continued growth in U.S. onshore shale and other tight oil formations and Canadian oil sands.
EIA forecasts U.S. crude oil production to increase to 6.02 million bpd this year, the highest level of production since 1998.
“The rise in production is driven by increased oil-directed drilling activity, particularly in onshore tight oil formations,” EIA said.
An increase in Lower 48 crude oil production of 450,000 bpd this year will offset declines averaging 30,000 bpd from Alaska and 50,000 bpd from the Gulf of Mexico.
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