EIA expects 2009 US natgas output to fall 0.3 pct

NEW YORK, April 14 (Reuters) - The U.S. Energy Information Administration on Tuesday said it expected domestic natural gas production in 2009 to decline from 2008 levels, the first annual output drop since 2005.

In its April Short-Term Energy Outlook, EIA forecast U.S. marketed natural gas output this year would average about 58.42 billion cubic feet per day, down 0.3 percent from last year's daily rate of 58.62 bcf.

For months, EIA had expected production in 2009 to exceed 2008 levels, but in recent reports it has steadily scaled back estimates.

EIA said the sharp drop in drilling activity and declining productivity of wells already in place will cause production to steadily drop as the year progresses.

In 2010, EIA said it expects total U.S. marketed natural gas production to decline another 1 percent despite expectations for higher prices and a rebound in drilling.

Projected U.S. imports of liquefied natural gas this year are expected to jump 36 percent from 2008 to about 480 billion cubic feet, or 1.31 bcf per day, as depressed demand in Europe and Asia and new global liquefaction capacity drives more LNG here.

But the increase in LNG shipments will be more than offset by an estimated 1 bcf per day, or 11 percent, drop in pipeline imports, primarily from Canada, EIA said.

EIA also projected domestic gas consumption in 2009 would fall 1.19 bcf per day, or 1.8 percent, to 62.39 bcf per day, more than the 1.3 percent decline it forecasted last month.

The outlook for continued economic weakness in 2009 was expected to take the greatest toll on industrial demand, which is expected to fall 7.4 percent this year, up from EIA's previous estimate for a 6 percent drop.

EIA still expects small demand increases this year from commercial and residential consumers, where consumption is influenced more by weather than economics.

And it also expects a 0.7 percent increase from the electric power sector as lower gas prices, particularly in the Southeast, cause some generators to switch from coal to gas.

EIA expects consumption in 2010 to remain relatively unchanged or gain slightly but said the outlook was subject to uncertainty about future economic conditions.

In its price outlook, EIA said the Henry Hub spot price was expected to average $4.24 per thousand cubic feet this year, down nearly 54 percent from 2008's $9.13 average and 9 percent lower than its previous estimate last month.

For 2010, EIA sees prices at Henry Hub, the benchmark supply point in Louisiana, rising 38 percent to $5.83, as the pullback in drilling trims supply and an improving economy lifts demand. (Reporting by Joe Silha; Editing by Christian Wiessner)