"EIA expects total natural gas consumption will decrease by 1.9 percent in 2009 and by an additional 0.4 percent in 2010. A steep decline in demand by the industrial sector, and smaller but significant declines in the residential and commercial sectors, have been partially offset by consumption growth in the electric power sector this year. Low natural gas prices relative to coal caused substantial switching to natural gas for baseload electric power generation throughout most of 2009. However, in recent weeks, natural-gas-fired generation has been closer to year-ago levels because of the seasonal increase in natural gas prices and the decrease in coal prices driven by historically high coal stocks. In addition, warmer-than-normal weather over the eastern United States during November depressed seasonal space-heating demand in the residential and commercial sectors. This weaker consumption is evident in natural gas working inventories, which increased by an estimated 9 billion cubic feet (Bcf) during November compared with the previous 5-year average decline of about 57 Bcf over the month.A return to normal weather and expectations for economic growth are the primary drivers in EIA's forecast for consumption increases in the residential, commercial, and industrial sectors in 2010. However, EIA still expects total consumption to fall as higher natural gas prices contribute to some reversal of the coal-to-natural-gas switching that took place in the electric power sector during 2009.
EIA expects total marketed natural gas production will increase by 3.7 percent in 2009, followed by a decline of 3.1 percent in 2010. Minimal hurricane disruptions and significant growth in production from onshore shale basins have contributed to the increase in domestic supply this year, despite a nearly 60-percent decline in the working natural gas rig count from September 2008 to July 2009. According to Baker Hughes, the working natural gas rig count is currently 748, up 83 from the low of 665 this past July. Although marketed production in the Lower-48 non-Federal Gulf of Mexico has declined since peaking in February 2009, the recent dip in September production appears to be the result of shut-ins, maintenance, and pipeline constraints, as opposed to declining field productivity. Production volumes are expected to have recovered in October and November. Shorter completion times and enhanced well productivity in shale basins contributed to sustained higher production levels amidst a dramatically lower rig count in 2009."
Source: U.S. Energy Information Administration