In 2019, natural gas spot prices at the national benchmark Henry Hub in Louisiana averaged $2.57 per million British thermal units (MmBtu), roughly 60 cents/MmBtu lower than in 2018 — the lowest annual average price since 2016, Kallanish Energy reports.
Lower natural gas prices last year supported higher consumption — particularly in the power generation sector — and higher natural gas exports, the Energy Information Administration reported.
Continued growth in domestic production of natural gas also supported lower natural gas prices throughout the year.
Low and stable
Monthly average natural gas prices at most key regional trading hubs in 2019 reached their highest levels in February, and they were relatively low and stable from April through December.
In the Northeast, additional imports of liquefied natural gas into New England limited price spikes during the winter of 2018–19. Despite a cold snap in the Midwest in February 2019, natural gas prices at the Chicago Citygate were lower than during previous extreme weather events, EIA found.
However, in the Pacific Northwest, unseasonably cold weather at the end of winter coupled with regional supply constraints and decreased storage inventories led to significant price spikes at the Northwest Sumas hub in Washington state in March.
Additional pipeline takeaway capacity
Additional pipeline takeaway capacity in the Permian Basin eased some infrastructure constraints and increased regional prices at the Waha hub in West Texas after six consecutive months of prices lower than $1 per million Btu (MmBtu) from March through August.
Natural gas consumption in the residential and commercial sectors increased by 2% in 2019 compared with 2018, based on EIA monthly data through October, and estimates for November and December.
Natural gas use in the electric generation sector also increased in 2019, particularly in July and August when a heat wave in the Midwest and the Northeast led to record-high generation by natural gas-fired power plants.
Dry gas production keeps climbing
Lower summer natural gas prices, which averaged $2.33/MmBtu in June through August — the lowest summer average Henry Hub natural gas price since 1998 — have supported higher natural gas-fired generation in the summer months.
Dry natural gas production has grown every year since 2016. Production increased by 7.5 billion cubic feet per day (Bcf/d) (9%) through the first 10 months of the year after record growth in 2018. Sustained growth in production put downward pressure on prices, which continued to decline for most of 2019.
This post appeared first on Kallanish Energy News.