White Papers US Gas and LNG Markets | Page 3

US Gas and LNG Markets - Continuing Challenges are Forecast
A ComTechAdvisory Whitepaper
A CHANGING DEMAND MIX FOR US
NATURAL GAS
Though there are numerous factors that impact supply and demand for natural gas in any
particular market, given the continuing increases in oil associated natural gas production in the
US, the variables that will most affect prices will clearly be on the demand side for the foreseeable
future. In this market, demand is driven by five components - residential & commercial demand
(primarily for heating), industrial demand (manufacturing processes including combined cycle
power generation and petrochem feedstocks), power generation, pipeline exports and LNG
exports.
Residential & commercial demand is generally weather
driven. Comparing Jan–June 2018 to the same
period in 2019, residential & commercial demand
increased 3.3%, primarily due to colder temperatures
in the Northeast US. However, variances in seasonal
demand from year-to-year generally even out and any
changes from “normal” demand are usually absorbed by
underground gas storage. Additionally, any increased
demand driven by economic growth or new building
construction is expected to be offset by mandated
improvements in energy efficiency. As such, the EIA
expects little growth in natural gas use in this sector,
forecasting only a 0.2% increase through 2050.
Industrial demand generally follows economic growth
patterns - an expanding economy will consume more
natural gas for manufacturing and processing fuels &
feedstocks. Overall though, current forecasts indicate
growth through 2050 is expected to be slightly below
1% per year, with total demand from the industrial sector
expected to grow to 37 bcfd in 2050, an increase of
about 9 bcfd over 2019.
The other three primary components of demand - power
generation, pipeline exports (primarily to Mexico) and
LNG exports - have become the predominate drivers
of current and future demand growth and will have
the greatest impact on prices and new infrastructure
investment over the next several decades.
With increasing supplies of solar and wind renewable
power flooding the US market and the continuing
retirement of coal-fired generation, more gas-fired
generation will be required to provide baseload
generation and ensure grid stability. In total, gas burned
for power generation will account for about 39% of the
overall power mix in the US in 2050, up from 34%
in 2019, resulting in an 3.6% increase in natural gas
demand for power generation - from 28.5 bcfd in 2018
to 33.3 bcfd in 2050.
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