Energize Weekly, January 23, 2019
Brent oil prices will rise to $61 a barrel in 2019 and $65 a barrel in 2020, while natural gas prices will remain below 2018 levels for both years, according to federal Energy Information Administration (EIA) forecasts.
West Texas Intermediate crude oil prices will average about $8 a barrel lower than Brent in the first quarter of 2019, with the gap closing to $4 a barrel in the fourth quarter and remaining at that level through 2020, the EIA said.
Most of the growth in oil production will come from the Permian Basin in Texas and New Mexico, with U.S. production reaching 12.1 million barrels a day in 2019 and rising to 12.9 million barrels a day in 2020.
The EIA projects that spot natural gas prices will moderate in 2019, dropping to an average of $2.89 a million British thermal units (MBTU) at the Henry Hub from $3.15 per MBTU in 2018. The spot price will then rise to $2.92 per MBTU in 2020.
Coal production will continue to fall to 725 million short tons in 2019, a 3 percent drop from 2018 and then face another 50 million short ton drop, 7 percent, in 2020. “This decrease is the result of coal’s relatively weak competiveness in the electric power sector compared with natural gas, as well as an assumption of lower demand for U.S. coal exports,” the EIA said in its January Short-term Energy Outlook.
Natural gas will continue its expansion in the utility sector with natural gas-fired plants rising to 37 percent of generation in 2020 from 35 percent in 2018. Coal’s share of electricity generation will drop to 24 percent in 2020 from 28 percent in 2018.
Total U.S. natural gas consumption is projected to increase 1.3 percent in 2019 to 82.7 billion cubic feet per day and rise another 900 million cubic feet per day, 1.1 percent, in 2020.
Wind, solar and other non-hydropower renewable sources provided 10 percent of the electricity generation in 2018. That is forecast to rise to 13 percent in 2020. Hydropower has been the largest renewable resource with 7 percent of generation in 2018. EIA expects hydro output to remain about the same, but by 2019, wind should have a larger share of overall renewable generation than hydro for the first time.
