1 / 23

Industrial Natural Gas Demand

Industrial Natural Gas Demand. The factors affecting EIA’s industrial natural gas consumption forecast. GDP; Employment; Prices; Weather; Natural gas-weighted industrial production index . EXAMPLE: Food(0.1091) + Paper(0.0945) + … + Fabricated Metal Products(0.0507)

elsie
Download Presentation

Industrial Natural Gas Demand

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Industrial Natural Gas Demand

  2. The factors affecting EIA’s industrial natural gas consumption forecast • GDP; • Employment; • Prices; • Weather; • Natural gas-weighted industrial production index. EXAMPLE: Food(0.1091) + Paper(0.0945) + … + Fabricated Metal Products(0.0507) • PROBLEM: Industrial natural gas consumption has declined while all proxies for industrial production have increased.

  3. Data Sources • U.S. Census Bureau. Current Industrial Reports; • U.S. Census Bureau. Annual Manufacturers Survey; • U.S. Geological Service. Minerals Commodity Statistics and Information; • U.S. Bureau of Economic Analysis; • American Iron and Steel Institute (AISI); • EIA Natural Gas Monthly; • EIA Manufacturing Energy Consumption Survey (MECS); • EIA Petroleum Supply Annual; • EIA -820 Survey: Fuels Consumed at Refineries.

  4. Overview: Natural Gas Consumption in the Industrial Sector • Industrial sector accounts for largest percentage of total U.S. natural gas consumption. • Business operations of industrial sector consumers are sensitive to large, sustained swings in the price of natural gas. • Annual average price to industrial consumers was $3.59/MMCF in 1997 and $7.88/MMCF in 2006 (nominal). U.S. Natural Gas Consumption by Sector, 2006

  5. The Composition of Industrial Natural Gas Consumption: 2002 Manufacturing Energy Consumption Survey (MECS)

  6. 2002 Manufacturing Energy Consumption Survey (MECS)

  7. Natural gas-weighted Industrial Production Index results with various MECS demand shares

  8. The Puzzle: Industrial Natural Gas Demand ≠ Industrial Production Index

  9. 2002 Manufacturing Energy Consumption Survey (MECS) *Standard Industrial Classification (SIC)

  10. Comparison of STEO Gas-weighted Production Indices

  11. Petroleum and Coal Products (NAICS 324) • Petroleum and coal products (NAICS 324) accounted for about 14 percent of total industrial natural gas demand (MECS, 2002). • Petroleum refineries (NAICS 324110) were responsible for 799 Bcf, or 94 percent, of natural gas consumption in this subgroup (MECS, 2002). • Natural gas consumption at petroleum refineries (NAICS 324110) declined more than 17 percent from 2000 to 2006.

  12. Petroleum and Coal Products: PetroleumRefineries

  13. 16 Refineries Account for Large Portion of Decline in Fuel Consumption

  14. Agricultural Chemicals (NAICS 3253) • Agricultural chemicals* (NAICS 3253) accounted for roughly 8 percent of total industrial natural gas (MECS, 2002). • 22 percent of the natural gas consumed in the chemicals (NAICS 325) subsector (MECS, 2002). • Nitrogenous fertilizers make up 94 percent of gas consumption within the agricultural chemicals sector (MECS, 2002). • About 90 percent of U.S. ammonia production in 2006 was dedicated to manufacturing nitrogenous fertilizers (U.S. Census). • *Agricultural chemicals require the dual use of natural gas as a fuel and feedstock.

  15. Agricultural Chemicals: U.S.Ammonia Production

  16. Agricultural Chemicals: Ammonia Imports Source: U.S. Census Bureau. Current Industrial Reports: Fertilizers and Related Chemicals.

  17. Primary Metals (NAICS 331): Iron and Steel Mills • Primary metals (NAICS 331) accounted for roughly 11 percent of total industrial natural gas (MECS, 2002). • 58 percent of the natural gas consumption for primary metals was by iron and steel mills (NAICS 3311). • Natural gas consumption for iron and steel production declined more than 8 percent from 1998 to 2005 (American Iron and Steel Institute).

  18. Primary Metals (NAICS 331): Iron and Steel Mills

  19. Comparison of STEO Gas-weighted Production Indices

  20. Adjusted Production Index: Petroleum and Coal Products (NAICS 324)

  21. Adjusted Production Index: Agricultural Chemicals (NAICS 3253)

  22. Adjusted Production Index: Primary Metals (NAICS 331)

  23. Next Steps: STEO Gas-weighted Industrial Production Index Is there a better metric or proxy for industrial energy (natural gas) consumption? Based on the changing composition of industrial natural gas consumption, how should the coefficients of the various subgroups be treated? Have the prominent industrial sub-sectors been identified? How can revisions to this index improve the efficiency and effectiveness of EIA’s short-term forecasting?

More Related