New methanol plants under development in the United States are increasing natural gas consumption in the industrial sector, the U.S. Energy Information Administration (EIA) said on Thursday.
Three new plants expected to come online in 2019 and 2020 have a combined nameplate capacity of about 3.3 million metric tons per year (MMmt/y) and will increase total U.S. methanol capacity to 9.4 MMmt/y, a 45 percent increase from the current U.S. capacity.
The EIA forecast that new methanol projects will help increase industrial natural gas demand through 2020. Total U.S. industrial natural gas consumption is expected to average 23.1 billion cubic feet per day (Bcf/d) in 2019 and 23.4 Bcf/d in 2020, up from 22.6 Bcf/d in 2018.
Relatively low natural gas prices in recent years serve as incentives to develop new methanol facilities. Natural gas prices in the Permian, a region in western Texas and southeastern New Mexico of the United States, have been especially low relative to the Henry Hub national benchmark. In 2018, Permian prices averaged 1.98 U.S. dollars per million British thermal unit (MMBtu), compared with Henry Hub prices of 3.15 dollars per MMBtu.
According to the EIA's latest Short-Term Energy Outlook, Henry Hub natural gas spot prices are expected to average 2.83 dollars per MMBtu in 2019, down 32 cents per MMBtu from the 2018 average.
The EIA also forecast that U.S. dry natural gas production will average 90.2 Bcf/d in 2019, up 6.9 Bcf/d from 2018. The EIA expected that U.S. natural gas production will continue to rise in 2020 to an average of 92.1 Bcf/d.
When it comes to natural gas consumption, the EIA said that total U.S. natural gas consumption averaged an estimated 81.6 billion Bcf/d in 2018. The EIA expected it to increase by 1.3 percent in 2019 and then increase by a further 1.1 percent in 2020.
The United States exported more natural gas than it imported in 2018, with net exports averaging 2.1 Bcf/d. EIA forecast that gross U.S. exports will rise by 31.5 percent to 13.2 Bcf/d in 2019 and then by 15.1 percent to 15.2 Bcf/d in 2020.
Editor:Cherie
