North American Natural Gas Market Outlook

Transcription

1 North American Natural Gas Market Outlook How Long will Natural Gas Prices Stay Low? Based on ICF s Gas Market Compass January Base Case ACEEE 2013 National Symposium on Market Transformation March 25, 2013 Kevin Petak Vice President, ICF International Kevin.Petak@icfi.com

2 Disclaimer This presentation presents views of ICF International. The presentation includes forward-looking statements and projections that are sourced to ICF s Gas Market Compass, an ICF Subscription Service. ICF has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual market results to differ materially from the projections, anticipated results or other expectations expressed in this presentation. 1

3 Contents Introduction to ICF Current Market Conditions Future Market Growth Projected Production Projected Prices Closing Thoughts About Gas Price Trends 2

4 Introduction to ICF 2011 revenue of $841 million 4,500 employees globally Diverse client base 72% U.S. federal, state, and local agencies; 23% U.S. commercial; and 5% Non-U.S. Global presence with more than 30 offices; headquartered in the Washington, D.C. area One of America s Best Small Companies, Forbes One of 10 Fastest Growing Government Contractors, Washington Technology 2010 & th Largest Public Relations Firm in America, PR Week Best Global Environmental Consultancy in multiple categories, Environmental Finance Magazine 2012 Largest Energy Efficiency Consultancy/Implementation Firm in North America Top 5 Consulting Firm in India and Brazil 3

5 Observations About Gas Market Conditions from ICF s Gas Market Compass Base Case Projection ICF sees gas prices averaging about $4.00 per MMBtu through 2015, then averaging $5.00 per MMBtu in the longer term. Prices have risen from a low of near $2.00 per MMBtu during the first quarter of last year to about $4.00 per MMBtu recently. Future market growth will place modest upward pressure on prices. Shale resource development will continue to be the big source of production growth for the foreseeable future. Roughly 30 billion cubic feet per day (Bcfd) of gas production from the shales today rising to 50 Bcfd by U.S. and Canada oil and NGL production is growing significantly, contributing significantly to associated gas production increases. Increasing gas production from oil and liquids rich plays will limit upward pressure on gas prices. Electric load growth is key to natural gas demand. Firming gas prices post-2015 are in part a result of 1.3% per year electric load growth Other new demand, most notably LNG Exports, petrochem gas use, and GTL are on the horizon. Much interest in LNG exports, but also plenty of opposition. Window of opportunity is during next 10 years. Gas-to-liquids (GTL) plants could become major gas consumers, but they will take time to build. Direct gas use in vehicles is a wildcard. Ammonia production and gas use in ethylene production up. 4

6 Market Growth is Likely to Come from a Number of Different Sources U.S. and Canadian Gas Demand (Tcf per year) Industrial (GTL) LNG Exports Industrial (Petrochem) Industrial (All Other) Power Commercial Residential Other

7 Future Supply Growth Continues to Depend on Unconventional Gas Supplies U.S. and Canadian Gas Production (Tcf per year) Shale Offshore 10 Tight Coalbed Methane 5 0 Conventional Onshore

8 Gas Prices Remain Near $4.00 Over the Next Few Years, but Increase as the Market Grows Annual Average Henry Hub Price (2010$/MMBtu) Perfect Storm Leads to Unsustainably Low Gas Prices Supply Rationalization Demand Surge Stable Prices Market Growth and Supply Growth in Lockstep Nuclear Retirements Source: ICF Base Case January

9 Gas Markets Come Full Circle, and the Story of the Three Bears 8

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