Warm weather will produce 0.5% 2006 gas demand decline: US EIA

Washington (Platts)--12Dec2006

Warmer-than-normal weather in the early part of 2006 will cut US natural
gas consumption by an estimated 0.5% for the year, the US Energy
Information Administration said on Tuesday.

But with an expected return to normal weather, consumption should recover
in 2007 and grow by 1.5% to total 22.22 Tcf, the agency said in its December
Short-Term Energy Outlook.

According to the report, residential and commercial sector consumption is
expected to grow by 6.9% and 3.6%, respectively, next year, with industrial
usage likely to rebound from a decline this year to reach its highest level
since 2004 with a 1.8% rise in 2007. "Due to expectations of more moderate
summer temperatures in 2007 compared to 2006, power sector consumption is
projected to decrease by 3.6% in 2007," it said.

Domestic gas production should grow by about 2.3% this year before
dropping by 0.7% in 2007. "High storage levels and the reduction of
residential and commercial sector demand by 7.3% and 3.5%, respectively,
resulted in a 5% decline in net natural gas imports in 2006," said EIA, adding
that it expects net imports to remain basically unchanged in 2007, with a
sizeable increase in liquefied natural gas imports offsetting a decline in
pipeline shipments from Canada. "Despite strong projections of LNG supply in
2007, imports will continue to be affected by price competition in the global
market," EIA said.

As of December 1, working gas in storage stood at 3.406 Tcf, roughly 232
Bcf above the year-ago level and 282 Bcf above the 5-year average for that
date, said the report. US gas stocks now are expected to end the winter season
on March 31 at 1.43 Tcf, some 260 Bcf below the March 2006 level, "but still
above the average of the last 5 years."

--Chris Newkumet, chris_newkumet@platts.com

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