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Energy Insights Outlook Overview

North American Gas Outlook to 2030

“Despite 2 percent demand growth for gas per year—primarily driven by growth in liquefied natural gas exports (LNG)—low-cost production from shale gas/oil is expected to keep North American prices below $2.8 per million British thermal units for decades to come.”

Our North American Gas Outlook—developed with data and insights from Energy Insights models such as the North American Flow and Basis Model, Global Gas Model, and North American Supply Model—explores the underlying trends in greater detail and shares our perspective to 2030.

Five key findings

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Executive Summary

Low-cost production expected to meet growing gas demand for decades to come

North American gas demand is expected to grow by about 2 percent per year before reaching 116 billion cubic feet per day in 2030, and US LNG exports will play a major role—accounting for 55 percent of that growth. We anticipate that Henry Hub–linked US LNG will remain cost-competitive and flexible, leading US LNG utilization to be about 80 percent from 2021 to 2024.

Other key drivers of that gas demand growth include exports to Mexico, the industrial and petrochemical sectors, and shifting power generation. Mexico’s growing power and industrial sectors will lead Mexican demand to grow by around four billion cubic feet per day, and the industrial and petrochemical sectors have the potential to drive an additional amount of around two to three billion cubic feet per day of gas demand elsewhere as global product imports are displaced and low feedgas prices increase US competitiveness. In the power sector, we anticipate that gas demand from power generation will keep pace with global demand growth—rising 2 percent per year—as about 26 gigawatts of coal-power capacity is gradually retired. Post 2020, that growth will slow to 0.3% per year as renewables become more competitive, eventually accounting for approximately 23 percent of total generation by 2030.

However, we expect that meeting this increasing demand will be relatively easy; North America has approximately 900 trillion cubic feet of reserves—enough to cover gas demand for the next 25 or more years. Appalachia is expected to account for around 30 percent of total gas production to 2030, and will soon benefit from increased takeaway capacity. Over six billion cubic feet per day of new gas pipeline capacity from the Marcellus to the East Coast will come online, stabilizing supply and prices even during extreme weather events such as 2018’s bomb cyclone that led temperatures to plummet across the eastern US. However, we think it likely that more midstream build-out will be needed post 2026.

Meanwhile, associated gas from the Permian and SCOOP/STACK is well placed to meet growing LNG and Mexico export demand. However, the Permian will require an additional amount of approximately six billion cubic feet per day pipeline capacity to meet growing associated gas production. Increasing gas production from Appalachia and SCOOP/STACK should also continue to push Canadian and Rockies gas out of the Midwest. Elsewhere, renewed interest in the Haynesville, driven by high initial production rates and proximity to demand centers, will cause production to rise by 2.3 billion cubic feet per day by 2019.

Overall, we expect that this combination of supply and demand drivers will enable gas prices to remain stable in the short to mid-term. However, as associated gas production increases and renewables begin to capture some of the demand typically held by gas, we anticipate that prices will move below $3 per million British thermal units.

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