During the 25-year period, natural gas consumption in the U.S. will rise 1 percent a year, from 28 trillion cubic feet (Tcf) in 2015 to 34 Tcf in 2040, according to EIA’s report.
“The industrial and electric power sectors make up 49% and 34% of this growth, respectively, while consumption growth in the residential, commercial, and transportation sectors is much lower,” the report stated. “Energy-intensive industries and those that use natural gas as a feedstock, such as bulk chemicals, make up most of the increase in natural gas consumption.”
The growth stems primarily from low natural gas prices. According to the report, natural gas prices are projected to remain at or below $5 per million British termal units ( MMBtu) through 2040 (in 2015 dollars). Henry Hub spot prices averaged $2.62 per MMBtu in 2015, the lowest annual average since 1995. Gas prices, though, will rise through 2040, primarily due to rising demand for exports of liquefied natural gas (LNG).
The amount of natural gas used for power generation reached an all-time high last year, and EIA officials are projecting natural gas will overtake coal as the leading source of U.S. power generation in 2016. To comply with the carbon limits of the Clean Power Plan, which has been stayed by the U.S. Supreme Court, natural gas is expected to displace much of the nation’s coal-fired generation.