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EIA expects natural gas from Mackenzie Delta in 2016, from Alaska in 2021 Unconventional Lower 48 gas, other Canadian gas and LNG imports will come on first; prices will increase in uneven fashion, predicts federal agency Petroleum News Alaska
Domestic natural gas demand is expected to grow 54 percent by 2025 and increases in domestic supply to help meet that demand will come from both unconventional natural gas production and an Alaska natural gas pipeline.
But, the U.S. Department of Energy’s Energy Information Administration said Nov. 20, an Alaska natural gas pipeline isn’t expected to begin delivering until 2021, and will be preceded by a Mackenzie Delta pipeline, expected to begin deliveries in 2016.
Large new domestic and imported supply projects be needed to meet the demand, the EIA said in the forecast for its 2003 annual energy outlook report.
Domestic sources of natural gas supplies will be from Alaska and unconventional gas. Production of unconventional natural gas — tight sands, coalbed methane and shale — will grow from 5.4 trillion cubic feet in 2001 to 9.5 tcf by 2025. Alaska production, 0.4 tcf in 2001, will grow to 2.6 tcf by 2025, the agency said.
LNG imports, terminals to increase Imported natural gas supplies will depend on expansion of liquefied natural gas imports and pipeline imports from Canada, which combined are projected to increase from 3.6 tcf in 2001 to 7.8 tcf by 2025 (22 percent of total natural gas demand in 2025). For existing LNG terminals (Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; and Lake Charles, La.) will expand and three additional LNG facilities will be built serving Florida and the Gulf of Mexico states. Another facility, built in Baja California, Mexico, will serve the California market, the EIA said, and total net LNG imports are projected to increase from 0.2 tcf in 2001 to 2.1 tcf by 2025.
Growth in pipeline imports from Canada will be in part dependent on completion of the Mackenzie Delta pipeline, which is forecast to be completed in 2016 and expanded in 2023. Initial full flow rate into Alberta is projected at 1.5 billion cubic feet per day.
Prices will rise unevenly The EIA said that natural gas prices will rise unevenly because completion of new projects will temporarily drive prices down. As an example the agency cited the Alaska pipeline, which at full capacity is expected to deliver 4.5 bcf per day. The impact of new projects is expected to be short-lived, the agency said, as markets adjust and demand increases.
“Despite the short-term impact, average natural gas prices are projected to move higher as technology improvements and new supply sources prove unable to completely offset the effects of resource depletion and increased demand,” the EIA said.
The average Lower 48 price for natural gas for 2002 is projected at $2.75 per thousand cubic feet (in 2001 dollars), but after 2002 gas prices are expected to rise, reaching $3.90 per mcf by 2025 (the equivalent of $7.06 per mcf in nominal dollars).
Prices volatile in 2002 In 2002 natural gas prices ranged from about $2 per mcf in January to between $3 and $4 an mcf by fall.
Crude oil prices also rose in 2002, “mainly because of reduced production by the Organization of Petroleum Exporting Countries and, to a lesser degree, fears about the potential impact of military action in Iraq,” the EIA said. Crude oil prices began the year at about $16 a barrel and were between $25 and $30 a barrel by fall. Economic growth projected at 3 percent The EIA said that from 2001 to 2025 the gross domestic product is projected to grow at an average annual rate of 3 percent.
As with natural gas, prices for crude oil are expected to rise from an average of $22.01 per barrel in 2001 to roughly $26.50 a barrel in 2025 ($48 per barrel in nominal dollars).
World oil demand is expected to increase from 76 million barrels per day in 2001 to 123.2 million barrels a day in 2025, but growth in both OPEC and non-OPEC production is expected to lead to relative slow growth in prices through 2025.
OPEC production is expected to exceed 60 million barrels a day in 2025, more than double the 28.3 million barrels a day produced in 2001 and non-OPEC oil production is expected to increase from 45.5 million to 58.8 million barrels a day from 2001 to 2025.
“A 1.0 million barrel per day decline in production in the industrialized nations (United States, Canada, Mexico, Western Europe, Japan, Australia, and New Zealand) is more than offset by increased production from Russia, the Caspian Basin, Non-OPEC Africa, and South and Central America (in particular, Brazil),” the agency said.
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