Natural Gas Demand, Customer Numbers Break Records – AGA Expert

WASHINGTON - Natural gas demand for both direct use and power generation continues to reach new record highs according to AGA VP, Energy Markets, Analysis and Standards Richard Meyer at AGA's annual Summer Outlook on natural gas markets. Despite record-breaking demand, natural gas prices remain under $3 in much of the country, in line with recent historical lows. Natural gas used for power generation in 2024 is on track to increase 4.5% from the previous record set in 2023.

According to data presented at the event, the natural gas industry saw a net increase of 650,000 new natural gas customers in 2022, a pace of more than one new customer connected each minute. While Texas was the state with the largest growth in natural gas customers at 84,000 new customers, California came in second with 46,000. "This is not a red state or a blue state issue. This is a United States issue. Customers continue to prefer natural gas across political lines because of its affordability and reliability," Meyer said.

"Gas demand for electric power is likely going to set another record in 2024 or will be close to the record set in 2023. We're also seeing the vital role of gas in maintaining energy system reliability during this cooling season," Meyer continued. More new pipeline capacity will be added in 2024 than in any year since 2017, helping to meet this demand.

Power generation from natural gas increased by 112 Terawatt-Hours in 2023, while coal generation declined 93 Terawatt-Hours. Solar generation increased by 41 Terawatt-Hours, and generation from wind and other renewables declined by 25 Terawatt-Hours.

Supplies of natural gas are relatively steady, with mild production pullbacks from producers responding to lower prices. Increased demand has returned natural gas commodity prices from historic lows to a more normal level that remains dramatically below 2022 highs. Storage levels for natural gas are currently 22% above the five-year average.

"We're seeing prices that are relatively low compared to history, but higher than we saw in 2022… 2023 was a record year, reaching 32.5 trillion cubic feet of gas," Meyer concluded.

Natural gas played a critical role in meeting both seasonal and peak demand. Increased residential energy efficiency is keeping overall demand relatively stable despite the increasing number of residential customers and the growing importance of natural gas for power generation.

Internationally, American natural gas has become the bedrock of European energy supply, with the United States supplying 49% of European LNG. Because of Russia's invasion of Ukraine, American exporters have redirected significant supplies of American LNG towards Europe, with 62% of American LNG exported in 2023 destined for Europe and 31% to Asia. These exports and low demand from warm weather have kept EU natural gas storage levels near peak capacity, allowing Europe to reduce its reliance on Russian natural gas. Natural gas export capacity is projected to double by 2028, allowing American exporters to continue meeting European needs while supplying emerging markets across the developing world.