American Oil and Gas Reporter - November 2015 - 134

NGSA Sees 'Flexible' Winter Gas Market

WASHINGTON-The picture emerging
for the U.S. natural gas market in winter
2015-16 is characterized by flexibility
with abundant production and storage
able to respond to changes in weather
and customer demand, according to the
Natural Gas Supply Association's 15th
annual Winter Outlook.
"We anticipate neutral pressure on
prices compared with last winter," when
Henry Hub prices averaged $3.21 an
MMBtu, comments NGSA Chairman Bill
Green, vice president, downstream marketing, for Devon Energy Corp.
Looking at the key metrics affecting
natural gas prices, NGSA says it expects:
* Domestic production, while a record
74.4 billion cubic feet a day, will be only
1.4 Bcf/d more than winter 2014-15, resulting
in neutral natural gas price pressure.
* The potential for a record inventory
of natural gas in storage exerts downward
price pressure.
* Strong economic fundamentals, but
slowing growth in gross domestic product
will exert neutral price pressure.
* A projected 5 percent increase in
electric sector demand for natural gas
will be largely offset by lower residential

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and commercial sector demand, resulting
in neutral price pressure.
* Warmer winter weather will put
downward pressure on gas prices.

Gas Supply
The 2015-16 Winter Outlook predicts
total available U.S. natural gas supply
will dip slightly from 76.8 Bcf/d to 76.7
Bcf/d, with still-growing domestic production offset by lower Canadian and
liquefied natural gas imports and growing
exports to Mexico.
Says NGSA's Green, "The shale revolution has ushered in a remarkable era,
as evidenced by dramatic growth in production over the last eight years. This
winter's supply is expected to be robust
because of drilling efficiencies and new
infrastructure coming on line to move
gas out of producing areas."
Helping to offset an expected 1.4
Bcf/d increase in domestic gas production,
the Outlook points to a report from Energy
Ventures Analysis Inc. (EVA) that projects
exports to Mexico will increase from 2.2
Bcf/d last winter to 3.2 Bcf/d this winter,
while imports from Canada drop from
5.7 Bcf/d to 5.6 Bcf/d.
NGSA adds that it expects "some liquefied natural gas imports. However, these
will be offset by the first LNG exports
from the Sabine Pass terminal in Louisiana.
Although more export facilities will follow
over the next few years, the amount of

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134 THE AMERICAN OIL & GAS REPORTER

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FILING SEPTEMBER 30, 2015.
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of the headquarters or general business office of the publishers: 1326 East 79th Street South, Haysville, KS 670602217. Publisher Charles E. Cookson, 2800 S. 127th St.
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LNG to be exported is projected to remain
a small slice of overall demand."
For winter 2015-16, the Winter Outlook
projects a net of 100 million cubic feet
of LNG exports a day.
Rounding out the supply picture, at
the end of September, NGSA projected
the withdrawal season would begin with
3.950 trillion cubic feet of gas in storage,
compared with 3.600 Tcf in storage at
the same time last year.
Gas Demand
The 2015-16 Winter Outlook predicts
overall winter demand for natural gas
will average 90.2 Bcf/d this winter, compared with 91.5 Bcf/d in 2014-15.
On the bullish side, the Outlook sees
5.8 Bcf/d of price-driven coal-to-gas fuel
switching-up from 4.8 Bcf/d in 2014-15-
resulting in a 1.1 Bcf/d increase (5 percent)
in electric sector gas demand this winter.
"We expect fuel-switching to reach
near-record levels," remarks Green, who
notes the record of 6.0 Bcf/d in coal-togas fuel switching was set in 2011-12.
More important in the long term,
NGSA points out, is a long-term structural
shift in power generation. "As of April
2015," the association notes, "the electric
industry must comply with the Environmental Protection Agency's Mercury Air
Toxics Standards rule. As a result, EVA
anticipates the retirement of 20 gigawatts
of coal-fired electricity to take place in

copies printed (net press run), average number copies each
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paid and/or requested circulation, average number of
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Number of copies single issue nearest to filing date:
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single issue nearest filing date: 862. Total distribution, average number of copies each issue during preceding 12
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Angie M. Lubbers, Comptroller.

American Oil and Gas Reporter - November 2015

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