US EIA sees 2006 natural gas demand falling below 2005 level

Washington (Platts)--9May2006

Total US gas consumption this year is expected to fall below last year's
level by 1.1% before rebounding in 2007 by 3.4%, the US Energy Information
Administration said Tuesday. Adjusting its month-ago demand estimates
slightly, the agency in its May Short-Term Energy Outlook put the 2006 and
2007 gas demand targets at 21.72 Tcf and 22.46 Tcf, respectively.

"With weak electric heating load due to the warm January and much weaker
expected cooling load this summer compared to 2005, the consumption of natural
gas for generation of electricity is expected to fall by 2.8% in 2006, then
increase by 2.3% in 2007," the report said. Also, because of an exceptionally
warm January this year, residential consumption is projected to fall by 5.1%
from 2005 levels and then increase by 6.5% in 2007, the agency said.

Recovery in natural gas-intensive industrial output following the 2005
hurricanes "will likely contribute to growth in industrial gas consumption
this year (3.5%) and in 2007 (2.3%)."

EIA reported that domestic dry natural gas production in 2005 declined by
2.8%, "largely in response to hurricane-induced infrastructure disruptions in
the Gulf of Mexico." Production is expected to increase by 0.8% this year and
1.6% in 2007. Finally, total liquefied natural gas imports are expected to
increase from their 2005 level of 630 Bcf to 740 Bcf in 2006 and 970 Bcf in
2007 as new infrastructure come online.

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