Industrial natural gas use to continue to grow quickly, EIA says

A gas flare is seen in an aerial view in the early morning hours of July 30, 2013 near Watford City, North Dakota. (Photo by Andrew Burton/Getty Images)
A gas flare is seen in an aerial view in the early morning hours of July 30, 2013 near Watford City, North Dakota. (Photo by Andrew Burton/Getty Images)

HOUSTON — New plants coming online are set to drive industrial natural gas growth forward by more than three percent in the next two years, the U.S. Energy Information Administration said in an analysis Wednesday.

Industrial facilities, which include methanol and fertilizer plants, consumed an average of 21.0 billion cubic feet per day of natural gas in 2014, up 24 percent from 2009. By the end of 2015, that figure is expect to rise by another 3.4 percent to an annual average of 21.7 billion cubic feet per day. In 2016, the EIA predicted another 3.9 percent gain to 22.5 billion cubic feet per day — a powerful bump in demand for the commodity.

Natural gas is widely used in the U.S. to make chemicals, to heat homes and to generate electricity.

Natural gas prices have collapsed from roughly $5-plus per million British thermal unit between 2000 and 2010 to less than $3.00 per million British thermal unit recently, as shale drillers unlocked massive amounts of the fuel from previously impermeable rock.

Industrial and other users of the fuel have stepped up plans to switch to natural gas as the fuel has become relatively cheaper. Much of the additional demand is expected to come from new industrial facilities coming online along the Gulf Coast.

In 2016, the EIA said three methanol plants are expected to come online in the region, using almost 400 million cubic feet of natural gas per day. Methanol is often combined with other chemicals to make things such as plastics and paints. An additional 100 million cubic feet of demand for the fuel is expected to come from a nitrogen fertilizer plant coming online in 2016.

Outside of the Gulf Coast, the EIA has tracked new methanol plans in Washington and Oregon, where companies are hoping to export the chemical to China. Fertilizer plants have also popped up in the agricultural areas  of Iowa, Indiana and North Dakota.

 

graph of industrial natural gas consumption and Henry Hub spot prices, as explained in the article text

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