The U.S. Energy Information Administration (EIA) estimates US natural gas consumption to reach record levels in 2022 partly because of increased natural gas use in the electric power sector, according to our January Short-Term Energy Outlook (STEO). The EIA estimates that domestic natural gas consumption averaged 88.7 billion ft3/d in 2022, a 6% increase from 2021. Electric power sector consumption averaged 33.3 billion ft3/d, an all-time high and up 8% from 2021, as the third-hottest Summer on record boosted July air-conditioning demand. Although natural gas prices were high compared with the previous five years, coal supply constraints, relatively high coal prices, and below-average stockpiles at coal-burning power plants contributed to less coal-fired power generation and more natural gas-fired power generation. Primarily affected by changes in temperature, total natural gas consumption rose in the residential sector (5%) and the commercial sector (7%).
US natural gas production reached a record high in 2022 as a result of:
Dry natural gas production averaged 98.0 billion ft3/d in 2022, surpassing the 2021 all-time high by 3.5 billion ft3/d. The Permian and Haynesville regions led the increase in production.
US natural gas storage inventories were historically low for much of 2022, as temperature-related demand increases outpaced production growth. Lower-than-normal temperatures during the 2021 – 2022 heating season (November 2021 – March 2022) pushed US natural gas inventories to a three-year low of 1387 billion ft3 on March 31, 17% below the five-year (2017 – 2021) average. Net withdrawals rose to a four-year high during the 2021 – 2022 heating season. During the refill sea-son (April 2022 – October 2022), higher-than-normal summer temperatures contributed to below-average net injections into storage. However, mild temperatures combined with higher production led to above-average weekly injection volumes in September and October, resulting in storage inventories ending the refill season 3% below the year-ago and five-year averages.
The 2022 average wholesale US natural gas spot price at the Henry Hub was the highest in real and nominal terms since 2008, averaging US$6.45 per million Btu, according to data from Refinitiv Eikon. Daily prices reached a high of US$9.85/Btu on 22 August 2022 and a low of US$3.46/Btu on 9 November 2022, and exhibited volatility throughout the year. Regional prices in the Northeast spiked in January, while regional prices throughout the western US reached over US$50.00/Btu in December and prices at the Waha Hub in West Texas traded below the Henry Hub for most of the year.
US gross natural gas exports continued their upward trend, as LNG capacity and exports in 2022 surpassed those in 2021 and drove total exports higher. The seventh US LNG export terminal began operations in March 2022, adding 1.3 billion ft3/d in baseload LNG production capacity, which helped offset some of the 2 billion ft3/d of capacity lost from a shutdown of the Freeport LNG terminal in June. Expanded pipeline infrastructure in producing regions supplying the US Gulf Coast increased capacity to transport natural gas to nearby industrial facilities and LNG terminals, allowing US shippers to grow exports. More than 60% of US LNG exports continued to flow to EU destinations in the first 10 months of 2022, displacing East Asian markets as the top destination for US LNG, mainly to offset a decline in Russia’s natural gas pipeline exports to Europe.
