North America gas markets long-term outlook H1 2013 Report

Commodity Market Report 15 June 2013

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Report summary

North American gas markets rallied from 2012 lows, but despite the improved price levels, gas-related rig counts continue to decline. This discipline on the production side is matched by a relatively stable market size, so for the 2013-’15 period, we expect Henry Hub prices to range between $3.75 and $4.25/mmbtu in real terms.

Executive summary
- Prices and Markets
  - Through 2016: domestic markets define price
  - Back half of the decade: a different dash for gas
  - Long-term markets
Supply
- Producers response to dictate medium term production rebound
- Key plays-growth remains concentrated on leading plays
  - Marcellus-wells and drilling continue to improve while infrastructure remains a constraint
  - Piceance-Marginal gas resource, but massive opportunity
- Regional production trends
- Drilling outlook-reduced call on gas rigs till the second half of the decade
- Canada
- Key risks to outlook
  - Downside pricing risks
  - Upside pricing risks
- Mexico: Power generation leads to increased imports
Demand
- Power generation
  - Key messages
  - Major risk factors
  - Power sector gas burn changes
  - Coal-gas substitution dynamics
  - Regional distribution
- Industrial
- Residential and commercial
- US NGV outlook
  - Transport
  - Marine bunker fuel
  - Global markets
  - North American LNG export outlook
  - US
  - Canada
  - Alaska
  - Export Policy
- Proposed Projects
  - US Lower 48 LNG
  - Alaska LNG
  - Canada LNG
- Canada
  - Domestic Demand
  - Power
  - Oil Sands
  - Core Industrial
  - Residential/Commercial
  - Canada NGV outlook
  - Net Exports
  - Mexico
Infrastructure
- Pipeline expansions
- Marcellus and Utica-accommodating growth
- Redirecting Western supplies.
- Basis: weak east, weaker west, and the low seasonal spreads
  - The Northeast: Changing dynamics
  - The Northeast: The infrastructure impact
  - The Rockies and California: Near term together, long term apart
  - AECO, Dawn, Chicago: Down they go
  - Gulf Coast: Shale Gas vs. LNG Exports

Tables and charts

This report includes the following images and tables:

Demand: Image 1
Demand: Image 2
Table 1. Key US plays supply metrics

Figure 1. North American supply growth (relative to 2013) by region and key play
Supply: Image 6
Supply: Image 7
Supply: Table 2
Chart 10. Mexico supply
Demand: Image 6
Demand: Image 7
Chart 17. Core heating demand and use per customer
Infrastructure: Table 1
34 more item(s)...