During 2020, and due to the Covid-19 related economic crisis, production of natural gas in the US was most negatively impacted during the months of April and May. Output reduced in 2.06bcfd and 5.3bcfd respectively. Production in 2020 will decline with respect to 2019 by 1.9%. GlobalData’s current forecast for 2021 production is 3.7% lower than 2020.
The largest drop in natural gas production during 2020 and 2021 is of unconventional production in the USL48, in particular the reduction in the Permian Basin shale play. Shut-ins of oil wells led to a reduction of associated gas of 1.2bcfd during the month of May.
Go deeper with GlobalData
According to US Energy Information Administration (EIA), overall consumption of natural gas is forecast to decrease during 2020 and 2021 by 1.9% and 5.9% respectively. During 2020, the largest reduction occurs in the industrial sector with a drop of 0.9bcfd with respect to 2019. In 2021, it is the electric power sector that reduces its demand with respect to 2020 by 5.2bcfd
Natural gas continues to increase its share in the mix of sources for power generation due to the increased efficiency of the combined cycle technology and competitive natural gas prices. EIA reports that electricity generation with natural gas as fuel has seen an increase from around 25% in 2010 to about 38% in 2019. For the year 2020, this percentage is expected to increase to 39% and then decline in 2021 to 33.6% due to higher natural gas prices
Weekly storage during 2020 has been above the five-year average and since July has surpassed the five-year maximum levels. It is expected that by end of refill season in October, stock levels will be at an extreme high and this can exert downward pressure on prices during Q4 2020. This is in spite of potential volatility due the shut-in of production in the Gulf of Mexico in anticipation to hurricane Delta.
The midterm outlook for natural gas remains relatively positive as the commodity continues to play a role in the energy transition strategy of operators and policymakers. However, in the near future natural gas is subject to the changes in demand occurring in the Covid-19 pandemic economy. An increase in the share of electricity generated by natural gas technology and US exports via pipeline and LNG, will continue to be important components in the evolution of natural gas production and demand in the US.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
Related Company Profiles
U.S. Energy Information Administration
EIA