United States gas markets long-term outlook H2 2013 Report

Commodity Market Report 14 January 2014

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Report summary

The cold start to this heating season boosted Henry Hub prices as high as $4.40/mmbtu, and the NYMEX strip is trading above $4.00/mmbtu for the first time since last spring. Despite the rally, however, prices aren’t likely climb further in the next two years; the major themes defining North American gas markets have not changed heading into 2014.

Executive summary
Prices
- The next two years
- Back half of the decade
  - Chart 4. Gas, coal (heat rate adjusted), and oil price outlook
  - Chart 5. Marginal play and price outlook
- Long-term markets
Supply
- Regional overview
  - Figure 1. North American supply growth (relative to 2014) by region and key play
- Key plays—Flight to quality becomes key to new corporate strategies
  - Marcellus - the leading low-cost gas producer with continued running room
  - Chart 7. Marcellus production by gas richness
  - Ohio Utica—data support strong growth outlook
  - Haynesville shale - Core areas support near-term growth as breakevens improve
  - Eagle Ford
  - Fayetteville
  - Piceance - Still a marginal gas resource, but looking better and better
  - Mid-Continent Rich Gas Plays (Anadarko Woodford and Granite Wash)
  - Tight oil: Long-term oil growths remains key
  - Bakken
  - Permian tight oil
  - Niobrara shale.
  - Mississippian and Anadarko Woodford oil
- Drilling outlook
  - Reduced call on gas rigs till the second half of the decade
  - Cost outlook
Demand
- GDP outlook
- Gas demand overview
- Residential and Commercial
  - Chart 16. Core heating demand and use per customer
- Industrial
  - Ammonia/Urea
  - Methanol
  - Petrochemicals
  - Iron and steel
  - Gas-to-liquids
  - Other / Generic projects
  - GDP / non-project-specific growth
- Power
  - Load growth
- - GDP outlook
  - Chart 19. GDP and load growth
  - Environmental policy
  - Chart 20. US capacity changes
  - Displacement and utilization
  - Regional outlook
  - Figure 2. Gas demand growth by region
- Natural Gas Vehicles and Marine Bunkering
  - Transport
Infrastructure
- Figure 3. Regional Supply-demand balance
- Northeast Pennsylvania: The most constrained market
- Figure 5. Key flow constraints in the Northeast: Constraint volumes
- How quickly will new capacity relieve constraints?
- Basis outlook
- Chart 30. Destination markets for Northeast supplies
- Changes from 2013-‘18: Gulf Coast flows shift south
- Changes from 2013-‘23: After carbon, the impact zone expands further
- Major pipeline projects
- Figure 10. Projects going south and west out of the Northeast
- Basis outlook
- Major pipeline projects
- Basis outlook
- Chart 32. Gulf Coast basis outlook
- Major pipeline projects
- Basis outlook
- Major pipeline projects
- Basis outlook
- Major pipeline projects
- Basis outlook
- Chart 35. Western basis outlook
Trade
- Piped Imports
  - Canada1
  - Mexico2
- US LNG export outlook
- Map 1. Key export infrastructure
  - Chart 26. Regulatory status of US LNG export projects
  - Export capacity
  - Alaska LNG

Tables and charts

This report includes 56 images and tables including:

Chart 1. Demand growth relative to 2013
Chart 2. US supply by type and Marcellus/Utica percentage
Chart 3. Gas price outlook

Chart 6. Global gas price outlook
Table 1. Long term forecast of key data
Table 2. Key US plays supply metrics
Demand: Image 1
Demand: Image 2
Infrastructure: Image 1
Infrastructure: Image 2
Infrastructure: Image 3
Figure 6. Northeast expansions
Table 6. Northeast expansions by year
Chart 28. Northeast basis outlook
Chart 29. New York vs. New England basis
Infrastructure: Image 7
Figure 7. 2013 flows along major corridors (mmcfd)
Figure 8. Change in flows from 2013 to 2018 (mmcfd)
Figure 9. Change in flows from 2013 to 2023 (mmcfd)
Infrastructure: Image 11
Chart 31. Southeast basis outlook
Infrastructure: Image 13
Chart 33. Mid-Continent basis outlook
Chart 34. Midwest basis outlook
Infrastructure: Image 16
Trade: Image 3
Prices: Image 1
Prices: Image 2
Supply: Image 1
Supply: Image 2
Chart 8. Haynesville well locations and production by sub-area
Supply: Image 4
Supply: Image 5
Supply: Image 6
Supply: Image 7
Supply: Image 8
Supply: Image 9
Chart 13. Onshore US Upstream cost outlook
Demand: Image 3
Demand: Image 4
Demand: Image 5
Demand: Image 6
Demand: Image 7
Chart 21. Gas demand growth (vs. 2013)
Demand: Image 9
Chart 22. Capacity utilization rates
Demand: Image 11
Demand: Image 12
Chart 23 Transport Demand
Chart 24. Pipeline flow forecast to and from the US
Chart 25. Growth of piped exports to Mexico
Trade: Image 4
Table 3. FERC timeline of US LNG export projects (application and estimated earliest award dates)
Chart 27. Proposed North American LNG export capacity
Table 4. Proposed US supply projects with earliest expected start dates on or before 2019
Trade: Image 7