EIA cuts 2017 US natgas output outlook to below 2015 record high

(Reuters) -- The US Energy Information Administration on Tuesday reduced its forecast for dry natural gas production in 2017 to 73.78 Bcfd, up slightly from last year but shy of the previous month's forecast of 74.80 Bcfd.

That means dry gas production would fail for the second year in a row to meet the record high of 74.14 Bcfd produced on average in 2015, according to the EIA's Short Term Energy Outlook (STEO) in January.

Dry gas output in 2016 averaged 72.36 Bcfd as low energy prices reduced drilling activity. It was the first annual production decline since 2005.

EIA projected dry gas production would rebound in 2018 to a record high of 76.62 Bcfd.

The EIA also cut its forecast US gas consumption to 75.37 Bcfd in 2017 from the December forecast of 75.96 Bcfd.

That would still top the 2016 record high for gas demand of 75.07 Bcfd and would be the eighth annual record in a row.

EIA forecast gas demand in 2018 would rise to a new all-time high of 76.85 Bcfd.

EIA said the United States became a net exporter of gas for the month of November 2016 as sales of liquefied natural gas and pipeline flows to Mexico increased, while imports from Canada eased. It said the next month that will happen will be in October 2017.

But on an annualized basis, the United States was not expected to become a net exporter of gas until 2018, according to federal data. The United States was last a full-year net exporter of gas in 1957.

EIA projected coal would retake its long standing lead as the primary fuel for power generators in 2017 with gas prices expected to increase by about 40%. Coal lost its title to gas in 2016 when gas prices dropped to their lowest since 1999.

EIA projected coal's share of generation will rise to 32.5% in 2017 from 30.4% in 2016. Prior to 2016, coal had been the primary fuel for US power plants for the last century.

EIA projected coal will again lose its crown to gas in 2018 as gas production increases while generators retire more coal plants for environmental and economic reasons.

EIA projected gas' share of power generation would rise to 32.8% in 2018 from 32.3% in 2017, still below 34% in 2016. Coal's share of generation will decline to 31.6% in 2018.

Reporting by Scott DiSavino; Editing by Marguerita Choy and David Gregorio

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