Natural gas spot prices at the national benchmark Henry Hub in Louisiana averaged $2.05 per million British thermal units (MMBtu) last year, the lowest annual average price in decades, reports the Energy Information Administration (EIA).
The EIA has based its findings on nominal prices from Refinitiv (1997–2020) and Natural Gas Intelligence (1994–1996) which have been adjusted for inflation using monthly consumer price index values from its Short-Term Energy Outlook Real Prices Viewer.
Last March, the spring weather and early reactions to the COVID-19 pandemic reduced natural gas demand which drove down prices. According to the EIA, the Henry Hub price averaged $1.66/MMBtu in June, the lowest monthly price in decades.
However, prices picked up in the second half of the year as a result of lower natural gas production and an increase in liquefied natural gas (LNG) exports.
Consumption of natural gas in the United States decreased among residential, commercial, and industrial users in 2020. However, natural gas use for electric power generation rose, based on the EIA’s monthly data through October 2020 and estimates for November and December.
Production of dry natural gas averaged 90.9 Bcf/d in the United States during 2020, or 2.2 Bcf/d less than in 2019, after reaching a monthly record high of 97.0 Bcf/d in December 2019. The production decline reversed a three-year trend of consistent growth in U.S. natural gas production.
The EIA notes: ‘The number of rigs drilling for natural gas began declining in the United States during the spring, reaching a record low of 68 natural gas-directed rigs in July. The rig count stayed relatively low throughout the rest of 2020.’
US LNG exports last summer were impacted by hurricanes and faltering demand for natural gas in Europe and Asia, but they did begin to climb towards the end of the year.
The EIA estimates that the United States exported 9.4 Bcf/d of LNG in November 2020, a volume equivalent to 10% of US dry natural gas production in that month.