EIA: Industrial Natural Gas Demand Seen Falling 7.4% In '09

The U.S. Energy Information Administration lowered its forecast for 2009 U.S. industrial natural gas demand again Tuesday, citing the effects of economic downturn.

Industrial gas consumption is forecast to decline by 7.4% this year, outpacing the EIA's previous forecast of a 6% decrease. Major industrial gas consumers, including companies in the fertilizer, chemicals and aluminum industries, have curbed gas use as they cut spending.

Total natural gas consumption is expected to fall 1.8% in 2009 amid ongoing economic downturn and remain flat in 2010, the EIA said. The EIA had previously forecast a 1.3% drop in 2009 and a 0.4% rise in 2010.

U.S. marketed natural gas production is expected to fall 0.3% in 2009 and slip 1% in 2010 as producers reduce rig counts. Producers such as Chesapeake Energy Corp. (CHK), Petrohawk Energy (HK) and SandRidge Energy (SD) have scaled back spending amid falling commodity prices.

Liquefied natural gas imports to the U.S. were expected to rise to 480 billion cubic feet in 2009 amid declining demand for gas in Asia and Europe, up from the 352 bcf received in 2008, the EIA predicted

Natural gas prices at the benchmark Henry Hub should average $4.24 a million cubic feet in 2009 and $5.83/Mcf in 2010, compared with $9.13/Mcf in 2008, the EIA said. Falling natural gas demand has placed downward pressure on prices, and Henry Hub spot prices are likely to remain below $4 until the fall, the EIA said.

-By Christine Buurma, Dow Jones Newswires; 201-938-2061; [e-mail]