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1 Glen Sweetnam Energy Information Administration Houston, Texas November 16, 2007 Outlook for North American Natural Gas Demand.

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Presentation on theme: "1 Glen Sweetnam Energy Information Administration Houston, Texas November 16, 2007 Outlook for North American Natural Gas Demand."— Presentation transcript:

1 1 Glen Sweetnam Energy Information Administration Houston, Texas November 16, 2007 Outlook for North American Natural Gas Demand

2 2 Outlook for Natural Gas Demand Key Assumptions Reference Case Projections Two Wildcards –Gas for Power Generation –Industrial Gas Consumption

3 3 Average Annual GDP and Population Growth for Selected Regions, 2004-2030 Source: EIA, IEO2007

4 4 World Oil Prices in Three World Oil Price Cases, 1980-2030 HistoryProjections Source: EIA, AEO2007 $ 59 $ 100 $ 36

5 5 World Oil Prices in Three World Oil Price Cases, 1980-2030 HistoryProjections Source: EIA, AEO2007 $ 95 $ 157 $ 58

6 6 Lower 48 Natural Gas Wellhead Prices in Three Cases (2005 dollars per thousand cubic feet) HistoryProjections High oil price case $7.63 Low oil price case $5.06 Reference case $5.98 Annual Energy Outlook 2007

7 7 North American End-Use Energy Consumption 26%49%24%41% Percent Change 2004-2030 Source: International Energy Outlook 2007

8 8 North American Marketed Energy Use by Resource Liquids Natural Gas Coal Renewables Nuclear HistoryProjections 39% 9% 23% 7% Share of Regional Total 23% 41% 24% 20% 8% Source: International Energy Outlook 2007

9 9 North American Natural Gas Consumption, 2004 and 2030 Source: International Energy Outlook 2007 Percent Change 2004-2030 29% 54% 136% 17%

10 10 U.S. End-Use Natural Gas Consumption 9%35%17% Percent Change 2004-2030 Source: Annual Energy Outlook 2007 8% 48%

11 11 Canadian End-Use Natural Gas Consumption 14%20%72%42% Percent Change 2004-2030 Source: International Energy Outlook 2007 76%

12 12 Mexican End-Use Natural Gas Consumption 162%158%92% Percent Change 2004-2030 Source: International Energy Outlook 2007 216%

13 13 North American Net Electricity Generation United States Canada Mexico Total North America Percent Change 2004-2030 49% 44% 46% 133% Source: International Energy Outlook 2007

14 14 North American Net Electricity Generation by Fuel Type Source: International Energy Outlook 2007

15 15 U.S. Gas Consumption by Sector 1990-2030 (trillion cubic feet) Transportation** Industrial* Residential Commercial Electric Power Projections History * Includes lease and plant fuel ** Includes pipeline fuel Annual Energy Outlook 2007

16 16 Canada Gas Consumption by Sector 2004-2030 (quadrillion Btu) Transportation Industrial* Residential Commercial Electric Power * Includes lease and plant fuel Source: International Energy Outlook 2007

17 17 Mexican Gas Consumption by Sector 2004-2030 (quadrillion Btu) Transportation Industrial* Residential Commercial Electric Power * Includes lease and plant fuel Source: International Energy Outlook 2007

18 18 Scenarios Examined by EIA to Assess Impact of Climate Change Initiatives on U.S. Natural Gas Markets Reference Case = EIA’s Annual Energy Outlook 2007 S. 280 Core Case = Provisions implemented under the Climate Stewardship and Innovation Act of 2007 RefNB = Reference Nuclear and Biomass Case. Holds nuclear and biomass to their reference case level through 2030 RefNB+noCCS = Reference Nuclear and Biomass plus no Carbon Capture and Sequestration Case. Adds the limitation that coal with CCS cannot be deployed before 2030 RefNBLNG+noCCS = Attempts to simulate a price scenario that assumes an OPEC-like natural gas cartel. In addition to the generation technology restrictions in the RefNB+noCCS case, LNG imports are held at the reference case level

19 19 2030 Refer- ence S. 280 Core RefNBRefNB+ noCCS RefNBL NG+ noCCS Natural Gas Generation (bkwh) 7529197941,2591,6711,540 Total Natural Gas Use (tcf) 22.026.124.327.129.528.4 Natural Gas for Generation (tcf) 5.8 4.16.89.38.5 LNG Supply (tcf)0.64.63.55.16.34.5 CO2 Permit Price ($/ton)n/a $47.90$53.10$61.20$61.80 Natural Gas Price at Henry Hub ($/mmBtu) $8.60$6.44$6.12$6.73$7.17$7.55 U.S. Natural Gas Indicators Under Various Climate Change Initiatives Source: EIA, Supplement to: Energy Market and Economic Impacts of S. 280, the Climate Stewardship And Innovation Act of 2007 2005

20 20 Industrial sector accounts for largest percentage of total U.S. natural gas consumption. Business operations of industrial sector consumers are sensitive to large, sustained swings in the price of natural gas. Annual average price to industrial consumers was $3.59/MMCF in 1997 and $7.88/MMCF in 2006 (nominal). U.S. Natural Gas Consumption by Sector, 2006 Overview: Natural Gas Consumption in the Industrial Sector

21 21 The Composition of Industrial Natural Gas Consumption: 2002 Manufacturing Energy Consumption Survey (MECS)

22 22 NAICS Code Industry Subgroup 1994 Natural Gas Consumption (Bcf) 1998 Natural Gas Consumption (Bcf) 2002 Natural Gas Consumption (Bcf) 311Food613553567 322Paper558570490 324Petroleum and Coal Products788981854 3251Basic Chemicals1037ª10111084 3252Resins and Plastic Materials326252 c 463 3253Agricultural Chemicals602557501 327Nonmetallic Mineral Products419 b 433411 331Primary Metals787908686 332Fabricated Metal Products214235204 Other129117311038 TOTAL6,6357,2316,298 2002 Manufacturing Energy Consumption Survey (MECS)

23 23 The Puzzle: Industrial Natural Gas Demand not Correlated with Industrial Production Index

24 24 Conclusions High level of uncertainty regarding gas use in the power generation and industrial sectors In last 10 years, U.S. industrial gas consumption has declined despite growth in output Policy measures designed to reduce greenhouse gas emissions could have a significant impact on U.S. gas consumption — gas use could be as low as 24 tcf or as high as 30 tcf in 2030.

25 25 Glen Sweetnam glen.sweetnam@eia.doe.gov Periodic Reports Short-Term Energy Outlook, monthly Annual Energy Outlook 2007, February 2007 International Energy Outlook 2007, May 2007 Special Analyses “Economic Effects of High Oil Prices,” Annual Energy Outlook 2007 “Restricted Natural Gas Supply Case,” Annual Energy Outlook 2005 www.eia.doe.gov

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