Commodity Market Report

North America gas long-term outlook highlights—H1 2016

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01 June 2016

North America gas long-term outlook highlights—H1 2016

Report summary

North American gas markets are dealing with the remnants of another mild winter, but fundamentals look to push prices up to $3.75/mmbtu in 2017 as demand accelerates just as oil and gas drilling have collapsed. After a subsequent ramp-up in drilling, we expect Henry Hub prices to hover around $3/mmbtu from 2018 to 2022, an amount which is stronger than our previous outlook. Northeast pipeline delays and lower liquids prices lead to a higher outlook for prices, and while demand looks to be robust, there are chinks in the armor in terms of a lower power burn and lower LNG liquefaction utilization. Better upstream economics and Northeast pipeline delays give an upside for WCSB production. In this short note, we provide our preliminary annualized prices for Henry Hub, Transco Leidy Line and Dominion South Point out to 2022 and outline the levers and risks. Our traditional long-term highlights update will follow soon.

Table of contents

    • Introduction
    • Supply-side drivers are bullish
      • Northeast pipeline delays limit the extent to which Marcellus and Utica gas can serve demand in other regions
      • Weaker liquids prices mean lower drilling and supply from oil and rich-gas plays
    • While our demand outlook has weakened
      • Gas demand in the power sector is weaker structurally
      • LNG export facilities will not run at capacity
    • Canada: brighter outlook on exports
      • Better upstream economics and Northeast pipeline delays mean upside for WCSB production

Tables and charts

This report includes 1 images and tables including:

  • Price outlook

What's included

This report contains:

  • Document

    NAGS LTO Supply and Demand Balances Spring 2016.xls

    XLS 949.50 KB

  • Document

    NAGS LTO NGV Breakout Spring 2016.xls

    XLS 665.00 KB

  • Document

    NAGS LTO LNG Breakout Spring 2016.xls

    XLS 819.50 KB

  • Document

    NAGS LTO Infrastructure Spring 2016.xls

    XLS 188.50 KB

  • Document

    NAGS LTO Demand Breakout Spring 2016.xls

    XLS 1.71 MB

  • Document

    NAGS LTO Price Outlook Spring 2016.xls

    XLS 934.50 KB

  • Document

    NAGS LTO Supply Breakout Spring 2016.xls

    XLS 754.50 KB

  • Document

    North America gas long-term outlook highlights—H1 2016

    PDF 250.01 KB

  • Document

    North America gas long-term outlook highlights—H1 2016

    ZIP 3.26 MB

  • Document

    Executive summary

    PDF 88.53 KB

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