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Updated June 2023

 

Figure S1.5 shows the historical and forecast Henry Hub natural gas price.

Summary

The Henry Hub price averaged US$6.52 per million British thermal units (MMBtu) in 2022, an increase of 75 per cent from 2021. The Henry Hub base-case price is projected to drop to US$3.10/MMBtu in 2023, increase to US$3.30/MMBtu in 2024 and reaching US$3.91/MMBtu by 2032. Based on the low- and high-price cases, prices are projected to range from US$1.96/MMBtu to US$7.79/MMBtu by 2032.

In 2022

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 2.76 billion cubic metres per day (m3/d) (98.09 billion cubic feet per day [Bcf/d]) in 2022, a 4 per cent increase from 2021. Production increased as drilling activity increased.

U.S. demand and exports: In 2022, natural gas consumption in the U.S. increased to 88.5 Bcf/d from 83.9 Bcf/d in 2021. The U.S. increased its exports of natural gas in 2022.

U.S. export capacity for liquified natural gas (LNG) increased in 2022 as more LNG production trains came online. Meanwhile, U.S. natural gas exports to Canada and Mexico via pipeline declined 2 per cent from 2021 to 8.3 Bcf/d in 2022.

Forecast for 2023 to 2032

U.S. production and demand: The price of Henry Hub is anticipated to decrease in 2023 amid ample supply and lower demand from power generation and industrial uses before rising in 2024. U.S. demand is expected to rebound in 2024; however, the high gas inventories and production will limit price gains. North American gas demand is expected to grow by 2025. Gas production associated with oil wells will increase as oil production is expected to increase due to higher forecast oil prices. From 2026 onwards, natural gas prices are forecast to increase as producers’ production costs rise as they drill in less productive and costly locations.

U.S. exports and imports: Natural gas exports from the U.S. are anticipated to rise throughout the forecast period. LNG capacity is expected to expand in the coming years. While natural gas pipeline imports from Canada increased in 2022, they are expected to revert to the decreasing trend that began in 2008 as U.S. domestic natural gas production rises.

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:

Low-price case:

  • North American demand is reduced more than expected due to an economic slowdown.
  • U.S. natural gas production grows faster than expected.
  • LNG capacity grows slower than expected.

High-price case:

  • Economic activity rebounds faster than expected, supporting North American natural gas demand in the near term.
  • Natural gas shortages develop in Europe, leading to a spike in LNG demand.
  • Less associated gas is produced as significantly fewer oil wells are drilled in the near term than expected.
  • Switching from coal to natural gas for power generation is accelerated in the U.S. 

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