Natural Gas Annual 2010 (NGA) - With Data for 2010
eia.gov
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In 2010, relatively abundant supply and low prices characterized natural gas markets. Demand for natural gas in the commercial and residential sectors ticked upward modestly compared with 2009, as did their prices. Industrial and electric demand both increased substantially with a rise of 6 percent and 7 percent respectively, reflecting economic recovery and consumers opting for natural gas over other sources of energy. Natural gas prices in those two sectors increased modestly as well, rising by 1 percent in industrial and 7 percent in electric, though they remain low by historic standards. Production volumes were a factor in keeping prices down, as production continued to climb year-on-year, offsetting increases in consumption. The natural gas spot price at Henry Hub averaged $4.37 per million British thermal units (MMBtu) in 2010, compared with $3.94 per MMBtu in 2009. Natural gas prices at the Henry Hub additionally exhibited reduced volatility; in 2010, the standard deviation of natural gas prices was $0.70 per MMBtu, down from $0.84 per MMBtu in 2009. This is likely a result of mild temperatures, the absence of extreme weather events, and high levels of production.
Despite the relatively low wellhead price of natural gas, 2010 saw increased levels of production and higher rig counts, both keeping downward pressure on prices. Shale production grew year-on-year, as did the number of horizontal rigs. Horizontal drilling, combined with hydraulic fracturing, allows producers to access natural gas trapped in shale formations that may not have been economically viable in the past. Shale production extracts not only natural gas, but also oil and other hydrocarbons, and though natural gas prices are low, the relatively high price of oil and natural gas liquids has contributed to a rise in drilling activity.