Updated May 2022
Figure S1.5 shows the historical and forecast Henry Hub natural gas price.
The Henry Hub price averaged US$3.72 per million British thermal units (MMBtu) in 2021, an increase of 75 per cent from 2020. The Henry Hub price is projected to increase to US$3.90/MMBtu in 2022, dropping to US$3.60/MMBtu in 2023 and US$3.50/MMBtu in 2024. From 2025 onwards, the price is projected to increase, reaching US$4.02/MMBtu by 2031. Based on the low- and high-price cases, prices are projected to range from US$2.04/MMBtu to US$7.92/MMBtu by 2031.
U.S. production: According to the U.S. Energy Information Administration, dry natural gas production (which is similar to the AER's definition of marketable gas) reached an estimated 2.65 billion cubic metres per day (m3/d) (93.5 billion cubic feet per day [Bcf/d]) in 2021, a 2 per cent increase from 2020. Production increased as drilling activity increased.
U.S. demand and exports: U.S. Consumption of natural gas decreased in 2021 to 83.0 Bcf/d from 83.3 Bcf/d in 2020. U.S. exports of natural gas continued to increase driving net exports to 10.5 Bcf/d in 2021 from 7.5 Bcf/d in 2020.
Liquified natural gas (LNG) export capacity increased in the U.S. with more LNG trains put into service. U.S. pipeline exports to Canada and Mexico increased 6 per cent from 2020 to 8.5 Bcf/d in 2021.
Forecast for 2022 to 2031
U.S. production and demand: The price of Henry Hub is anticipated to increase in 2022 amid tight supply and increasing LNG demand before settling in 2023 and 2024. As the global economy continues to recover from the COVID-19 pandemic, drilling activity, aided by attractive natural gas prices, will rebalance the market. Gas production associated with oil production will increase as oil production increases because of higher oil prices. From 2025 onwards, natural gas prices are forecast to increase as production costs are expected to rise, and producers begin to drill in less productive and costly production locations.
U.S. exports and imports: Natural gas exports from the U.S. are projected to rise throughout the forecast period. Recent infrastructure construction is expected to transport more natural gas to Mexico. Natural gas pipeline imports from Canada did increase in 2021 but are expected to revert to the decreasing trend that began in 2008 as U.S. domestic natural gas production increases.
Low- and High-Price Cases
The low- and high-price cases capture near- and long-term volatility of the Henry Hub price and are estimated using a 90 per cent confidence interval. The following scenarios were captured in the price cases:
- U.S. natural gas production will grow faster than expected.
- LNG capacity will grow slower than expected.
- Economic recovery is rapid as economies emerge from the global pandemic, supporting global demand.
- Less associated gas will be produced as significantly fewer oil wells are drilled in the near term than expected.
- Switching from coal to natural gas for power generation will grow significantly in the U.S.