EIA predicts record highs in 2016 for US gas output, consumption

March 8 (Reuters) -- US natural gas production in 2016 was expected to reach a record high of 79.68 billion cubic feet/day, down a shade from the 79.69 bcfd forecast last month, the US Energy Information Administration (EIA) said on Tuesday

The forecast would top 2015's all-time peak production of 79.13 bcfd and would be the sixth consecutive annual record high for US gas production, according to the EIA's Short Term Energy Outlook (STEO) in March.

The EIA also forecast US gas consumption would edge up to 76.79 bcfd in 2016 versus the 76.44 bcfd it forecast in February, due to increasing expectations of gas use by the electric power sector.

That would top the 2015 record high for gas demand of 75.38 bcfd and would be the seventh annual record high in a row.

For 2017, the agency forecast more record highs with production expected to rise to 81.36 bcfd and consumption growing to 77.31 bcfd.

In addition to power sector demand, the EIA also said gas consumption in 2016 and 2017 would rise as new fertilizer and chemicals projects that use gas as a feedstock come online.

The EIA forecast the growth of gas production in 2016 would slow to 0.9% from 5.4% in 2015 as low gas prices and declining rig activity begin to affect production. In 2017, however EIA expects production to grow by 2.1% as forecast gas prices rise, industrial demand grows and liquefied natural gas (LNG) exports increase.

That production growth will reduce demand for gas imports from Canada and support increasing exports to Mexico, the EIA said.

EIA projects LNG gross exports will increase to 0.5 billion cubic feet/day in 2016 with the startup of Cheniere Energy Inc's Sabine Pass LNG export terminal in Louisiana in February, and average 1.3 bcfd in 2017 as Sabine Pass ramps up its capacity.

Separately, EIA forecast coal production would decrease by 111 million short tons (101 million tons), or 12%, in 2016, the biggest annual percentage decline since 1958. In 2017, EIA expects coal production to stabilize, increasing by 16 million tons, or 2%.

EIA estimated the delivered coal prices would average $2.18/MMBtu in 2016 and $2.20 in 2017, compared with $2.23 in 2015.

That compares with gas prices at the Henry Hub benchmark in Louisiana of $2.61/MMBtu in 2015 and forecasts for $2.25 in 2016 and $3.02 in 2017.

(Reporting by Scott DiSavino; Editing by Marguerita Choy)

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