Natural gas boomed in 2018 with help of Permian, Haynesville

The U.S. was on track to export more natural gas than it imported for a second year in row at the end of 2018 as production and domestic consumption swelled in the first 10 months of the year, according to a report from the Energy Department.

Through October, dry natural gas production in the United States was 11 percent higher in 2018 compared with the same period in 2017. While final data has yet to be released, the Energy Department projects that U.S. natural gas production hit record levels in 2018 thanks to growing production in the Permian Basin, Appalachian Basin in the Northeast and Haynesville Shale in Texas and Louisiana.

Growing export capacity and production also meant the U.S. exported more natural gas than it imported for the second year in a row, the Energy Department said.

Expanded cross-border pipeline capacity kicked up exports to Mexico. In July 2018, exports to Mexico by pipeline exceeded 5 billion cubic feet a day. New liquefied natural gas export capacity at the Sabine Pass LNG export facility in Louisiana and the start of commercial operations at the Cove Point LNG facility in Maryland contributed to higher LNG exports.

At the same time, Americans also consumed more natural gas last year as natural gas-fired power plants continued to replace coal-fired power plants. In the electricity fuel mix, natural gas consumption was 17 percent higher in first 10 months of last year than in the same period in 2017.

Increased demand for space heating and air conditioning contributed to annual growth in natural gas consumption across the industrial (5 percent), commercial (12 percent) and residential (16 percent) sectors during the same period.

Low temperatures during the winter months and growing availability of U.S. production also bumped up domestic consumption. The average annual Henry Hub natural gas spot price rose to $3.16 per million British thermal units (MMBtu in 2018), a 15-cent increase from the 2017 average. Prices rose slowly throughout the year with a significant price bump in October and November that dipped in December.