While colder-than-forecast temperatures for November resulted in a higher monthly average for Henry Hub natural gas spot prices, federal energy officials have lowered their spot gas forecast for the start of 2020.
In November, the monthly average for natural gas prices at Henry Hub averaged $2.64 per million British thermal units (MMBtu), up 31 cents/MMBtu from October, according to this month’s “Short-Term Energy Outlook” released by the Energy Information Administration. However, prices were down to $2.46/MMBtu by the end of November because of milder weather.
Look for that downward trend to continue during the first quarter of 2020, primarily because of higher inventory, according to an EIA official. The agency projected an average of $2.45/MMBtu in 2020 for natural gas prices at Henry Hub, down 14 cents/MMBtu from the 2019 average.
EIA’s forecast for U.S. electric generation showed a continued rise in the share from natural gas-fired power plants, from 34% in 2018 to 37% in 2019 and 39% in 2020. The agency predicts the share of coal-based generation to slide, averaging 25% in 2019 and 22% in 2020, down from 28% in 2018.
EIA’s forecast for generation from renewables other than hydropower—mainly wind and solar—inched slightly upward this month, to 411 billion kilowatt-hours in 2019 and 471 billion kWh in 2020. Last month, EIA predicted 408 billion kWh in 2019 and 466 billion kWh in 2020.
U.S. coal production is expected to continue its decline, the report said, with a total of 697 million short tons (MMst) in 2019, 8% below 2018. EIA expects a 14% drop in 2020 to 601 MMst, “reflecting continued idling and closures of mines as a result of declining domestic demand.”
A Dec. 11 EIA report, “Today in Energy,” shows that lower demand for coal has resulted in fewer mining jobs. Coal mining employment dropped to 54,000 workers in 2018 from a high of 92,000 workers in 2011, with the Appalachian region experiencing the biggest losses.
“Most U.S. coal is consumed in the electric power sector and has faced increased competition from electricity generation from natural gas and renewable technologies,” the report said.