U.S. natural gas producers are set to boost output in 2025 following a year of production cuts, driven by rising demand from liquefied natural gas (LNG) export plants. This increase comes as prices, which had fallen to multi-decade lows, are expected to recover significantly.
According to the U.S. Energy Information Administration (EIA), U.S. natural gas production is projected to decline in 2024 for the first time since 2020, largely due to low average spot prices at the Henry Hub benchmark, which dropped to a 32-year low in March. Some markets even experienced negative pricing, forcing producers to pay buyers to take their product.
However, analysts anticipate that increasing demand for LNG exports will lead to a more than 40% rise in average annual gas prices in 2025 compared to 2024 levels. The EIA forecasts that annual average dry gas production will decrease from 103.8 billion cubic feet per day (bcfd) in 2023 to 103.3 bcfd in 2024, before climbing to 104.5 bcfd in 2025.
Total gas demand, including LNG and pipeline exports, is also expected to rise, from a record 109.9 bcfd in 2023 to 113.0 bcfd in 2025, primarily driven by a 14% increase in LNG exports. In contrast, domestic gas usage for power generation is likely to decline.
Two significant LNG plants currently under construction are anticipated to begin operations by the end of this year, which should further support export growth. The first phase of Venture Global’s Plaquemines facility and the Stage 3 expansion of Cheniere Energy’s Corpus Christi facility are expected to enhance gas flows.
Several major U.S. gas producers have indicated plans to increase output in the fourth quarter of this year and throughout 2025. Bank of America analysts noted that producers are holding back production in anticipation of higher prices, with the expected startup of new facilities contributing to increased supply.
Forecasts suggest that average annual Henry Hub gas prices could rise to around $3.27 per million British thermal units in 2025, compared to a four-year low of $2.29 in 2024. This tightening supply-demand dynamic is influenced by growing LNG exports, increased electrical generation demand, and potential winter weather impacts.
Coterra Energy’s CEO, Thomas Jorden, emphasized that while there is potential for increased production, the company will continue to curtail output until spot prices improve significantly. EQT, the nation’s second-largest gas producer, has already raised its fourth-quarter production guidance and expects a slight increase in overall production moving into 2025.
EOG Resources also anticipates a rise in output, projecting an increase from 1.745 bcfd in the third quarter to between 1.800-1.850 bcfd in the fourth quarter. Expand Energy, the largest U.S. gas producer post-merger, plans to boost production to around 7 bcfd in 2025, contingent on favorable market conditions.