There is more demand of U.S. natural gas now and it is expected to growth more by 2025, said Williams Companies (WMB) CEO Alan Armstrong.
The Henry Hub Natural Gas Spot Price reached $8.81 per million Btu in August 2022, but last year prices declined about 60% and moved down below the cost of marginal production, said Armstrong during a CNBC interview.
“We’re starting to see that supply taper off now,” he said. “At the same time, we’re starting to see demand pick up pretty strongly against the fundamentals — on a weather normalized basis.”
In 2023, demand for natural gas (NYSEARCA:UNG), (NG1:COM) was up by about 6%. LNG (liquified natural gas) growth is expected to pick up “a little bit” in 2024 and there will be “a big pick-up” in 2025, as a lot of new facilities come on, he said.
According to the Energy Information Administration, 20 new natural gas power plants are expected to come online with a total capacity of 7.7 gigawatts.
“You can see quite a bit of contango in the market with prices picking up by about 25% from 2024 to 2025,” said Armstrong. “So, producers are holding their breath right now through those periods of low prices.”
The EIA’s Annual Energy Outlook 2023 report said that U.S. natural gas production is expected to increase by 15% — to 42.1T cubic feet — and LNG exports are expected to increase by 152% — to 10T cubic feet — by 2050.
“Since 2010, we’ve seen total natural gas demand pick up by 60%, but pipeline infrastructure only 30%,” said Armstrong, adding that storage to back up intermittent renewals only increased by 12%.
