Natural Gas Update: EIA NARUC Winter Meeting

1
Natural Gas UpdateEIANARUC Winter Meeting
February 23, 2003

• Barbara Mariner-Volpe, Barbara.MarinerVolpe_at_eia.do
  e.gov
• Energy Information Administration

2
Presentation Outline

• Changes in EIAs electricity data
• Natural Gas Storage
• Current Gas Prices
• Retail Restructuring Update
• Natural Gas Outlook Short Term, Long Term
• EIAs 2003 Natural Gas Agenda

3
Changes in EIAs Reporting of Electricity Data
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Electric Power Sector Reporting by EIA

• Improves data accuracy.
• Relies on reports of electric generators instead
  of energy transporters.
• Reporting based on principle line of business.
• Data displays in all EIA products will be
  consistent.
• Staged implementation Annual products first,
  then monthly products.

5
EIAs reporting of electricity data

• Electricity-only and Combined-heat-and-power
  plants instead of utility/nonutility split
• Consumption by independent power producers
  reported in electric power sector instead of the
  industrial sector.
• Lag between AER and other annuals and monthlies

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Natural Gas Industrial Sector Example(Old)

• Combined heat and power plants associated with
  manufacturers--included
• Independent power producers (IPPs)--included
• Source of data on independent power producers
  differs in natural gas and electric power
  tabulations

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Natural Gas Industrial Sector Example(New)

• Combined heat and power plants associated with
  manufacturers--included and shown separately
• Independent power producers (IPPs)--excluded
• Source of data on independent power producers is
  the same in natural gas and electric power
  tabulations

8
Revisions to 2000 Estimates
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Impact of Revisions to Nonutility Electric Data
Total Natural Gas Consumption
10
Natural Gas Storage

• Weekly Storage Survey
• Current Stock levels

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Weekly Natural Gas Storage Report
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Revisions Have Become Much Less Frequent
Bars denote weeks in which a revision occurred
5 revisions in 10 weeks
2 revisions in 30 weeks
13
Very Low Storage Stocks Expectedat the End of
the 2002/2003 Heating Season
U.S. stocks as of Nov 1 and Heating Season
Withdrawals
14
Storage Stocks in the East and Producing Regions
are Expected to be in the low range by end of
winter 2003
15
NYMEX Natural Gas Futures Near-Month Contract
Settlement Price, West Texas Intermediate Crude
Oil Spot Price, and Henry Hub Natural Gas Spot
Price
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Why Are Natural Gas Prices High?

• Weather Temps. avg 5 below normal (13 less
  than year ago)
• Storage 3,116 bcf at start of winter (4 above
  5-yr avg. High demand has led to record drawdown
  (as of 2/14 stocks 27 below 5-yr avg)
• Production 02 production (through Oct.) down
  about 2.6 percent from 01 level
• Net imports (thru Oct 02) down 4 percent from
  01 level

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Status of Residential Choice Programs
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As of January 2003, Twenty-One States and the
District of Columbia Have Some Form of
Residential Choice Program
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Overall nearly 7 percent (4.1 million) of U.S.
residential gas customers (60.2 million) are
buying gas from marketers

• GA has most extensive program. 1.4 million
  residentials, (82 of state total) must choose.
• OH has about 1 million customers participating
  (33 of state total)
• MI has 332,000 (11 of state total)
• NY has 319,000 (7.5 of state total).

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Some states fine-tuned existing programs in 2002

• More stringent marketer certification standards
  IL, OH, NY
• C Improved consumer protection measures GA, NY,
  OH

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Enrollment in existing programs generally
increased in 2002

• Number of eligible customers increased
• Programs expanded
• Eligibility numbers doubled in MI, nearly tripled
  in VA, increased more than five-fold in WY and
  nearly seven-fold in IL
• Number of competitive suppliers increased

22
Short-Term Outlook for Natural Gas
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Under Base Case assumptions, EIA expects prices
to exceed 4 through 2004

(Base Case and 95 Confidence Interval)
Sources History Natural Gas Week Projections
Short-Term Energy Outlook, February 2003.
24
Total Natural Gas Demand Growth Patterns
Sources History EIA Projections Short-Term
Energy Outlook, February 2003.
25
Working Gas in Storage(Difference from Previous
5-Year Average)
Sources History EIA Projections Short-Term
Energy Outlook, February 2003.
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Long-Term Outlook for Natural Gas
27
Natural Gas Supply, Consumption, and
Imports, 1970-2025 (trillion cubic feet)
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Long-term Outlook for the Natural Gas Market

• U.S. gas demand is projected to grow 54 by 2025,
  to 35 Tcf
• Prices will increase slowly to about 3.90 (2001
  dollars/mcf) in 2025 (7.06 in nominal dollars)
• Imports increase to about 7.8 Tcf by 2025
  (including 2.1 Tcf of LNG imports)
• Rising prices and technology improvements
  increase reserve additions and production
• Alaskan Pipeline expected to start service in 2021

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EIA has Revised the Natural Gas Program to
Provide Additional, More Useful Information

• Strategic Information Planning
• Short-term market forecast
• Weekly Market Update
• New surveys Weekly Storage, Marketer
• New recurring reports and special reports
• Revising way EIA presents electricity data
• New query system for annual, non-confidential
  company data
• Natural gas data quality initiative

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EIAS NATURAL GAS PRODUCTS and 2003 AGENDA
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EIA Natural Gas Products

• Weekly Market Update, Storage Report, ESAR
• New surveys Weekly Storage, Marketer
• New recurring reports and special reports
  productive capacity report (released soon), LNG,
  derivatives
• Revising presentation of electricity data
• Improved access to non-confidential company data
  
• Natural gas data quality initiative ongoing

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New Natural Gas Data Requirements

• Marketer sales data in States with active
  customer choice programs
• More timely data with weekly underground storage
  estimates
• Bringing EIA sector definitions in line with
  industry record keeping practices
• More frequent frames updating
• LNG and improved production data