In its ‘Annual Energy Outlook 2022’ Reference case, the US Energy Information Agency projects that US natural gas production will continue to increase to 2050. The Reference case is the baseline in AEO2022, and it projects energy trends based on current laws, regulations, and market conditions. Much of the modelled growth in natural gas production results from rising demand for US natural gas exports, especially for liquefied natural gas. It expects natural gas exports to continue to rise through the early 2030s before levelling off.
Annual US natural gas production is expected to grow by almost 25% to 2050 in the AEO2022 Reference case. Much of this growth comes from the Appalachia Basin (East region) and the Mississippi-Louisiana salt basins (Gulf Coast region). However, more than half of it comes from natural gas production in oil formations, so-called ‘associated gas’.
The most significant increase in production of associated natural gas is in the Wolfcamp formation of the Permian Basin in the US Southwest. The Wolfcamp and Haynesville formations’ proximity to LNG export terminals on the Gulf Coast in Texas and Louisiana has facilitated production growth in these regions.
Natural gas from the Appalachia Basin also reaches export markets; however, EIA projects that the majority of new production from this region will be directed toward domestic markets because access from Appalachia to export terminals is constrained by pipeline infrastructure. As a result, the region’s relatively low production costs are predominately driving the growth in Appalachia’s natural gas production.
In 2021, US natural gas exports set a record high for the seventh consecutive year. EIA projects that after 2033 natural gas exports will stay relatively flat for the remainder of the projection period. Most natural gas export growth comes from LNG, but exports of natural gas by pipelines to Mexico and Canada will also increase.
Continued growth in natural gas exports to 2025 will be driven by increases in LNG capacity at facilities that are currently under construction. Additional LNG trains at Sabine Pass and Calcasieu Pass in Louisiana and at Golden Pass in Texas are now expected to enter service much earlier than anticipated in the 2021 projections, increasing the amount of infrastructure available for converting natural gas to LNG for export. Recent completions of additional natural gas pipeline infrastructure have also increased capacity into Mexico.
Natural gas production is expected to increase from 2025 to meet a growing LNG export demand, feeding a global demand for natural gas that will continue to be high, making it more economically feasible to build additional LNG export facilities in the USA. These LNG capacity expansions, coupled with increasing demand for natural gas abroad, result in an increased forecast of LNG exports to 5.86 trillion cubic feet by 2033 in the Reference case, up 65% from current levels.