Processing systems/design

Natural Gas Processing and Handling

Globally, the International Energy Agency forecasts a recovery in global demand for natural gas in 2021 led by growth in the Asia Pacific region as emerging markets recover. The US will continue to play a significant role as one of the largest producers and contributors to natural gas supply growth.

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In 2020, the spot prices of natural gas hit a record low in the US, reaching the lowest annual average price in more than a decade. Based on US Energy Information Administration (EIA) data, the average annual spot price reported in 2020 was $2.05 per million British thermal units (MMBtu). In the first few months of the year, reports from the EIA showed that natural gas prices started declining amid mild winter temperatures that resulted in a decline in the demand for natural gas for space heating.

In March 2020, following the onset of the COVID-19 pandemic, the already declining natural gas prices plummeted further. This decline continued through the first half of the year. The EIA reported the average monthly Henry Hub spot price in the first 6 months at $1.81/MMBtu.

June saw the lowest monthly natural gas price in decades (Henry Hub price averaged $1.66/MMBtu). Natural gas prices recovered in the second half of the year as natural gas production decreased and global exports of liquefied natural gas increased.

Natural gas consumption in the residential, commercial, and industrial sectors declined in 2020, according to the EIA. Milder winter temperatures were a major contributor in the first quarter of the year, but overall declining consumption was attributed to reduced economic activities as a result of the COVID‑19 pandemic. On the other hand, the consumption of natural gas for electric power generation registered an overall increase of 2% more than the 2019 average. According to the EIA, citing S&P Global Platts, this increase was attributed to power producers switching to cheaper natural gas from coal to meet the increased demand for electric power for cooling as summer temperatures increased.

The EIA in its Annual Energy Outlook 2021 projects that the industrial and electric power sectors and net exports will drive the growth in US energy consumption between 2020 and 2050. Natural gas consumption in other sectors is expected to increase steadily or remain flat. The EIA forecasts that natural gas production will increase as consumption increases and prices will stay low relative to past prices. The EIA expects continued growth in natural gas exports as natural gas production surpasses natural gas consumption. Globally, the International Energy Agency forecasts a recovery in global demand for natural gas in 2021 led by growth in the Asia Pacific region as emerging markets recover. The US will continue to play a significant role as one of the largest producers and contributors to natural gas supply growth.

This Month’s Technical Papers

Investigation of LNG Underwater Release and Combustion Behavior on Water Surface

JIP Drives New Ways of Managing Integrity of Floating Oil and Gas Assets

Fast-Tracking an FLNG Relocation in Malaysia

Recommended Additional Reading

SPE 200300 Overcoming Challenges in the Development of Underground Gas Storage by Ammar Alali, Saudi Aramco, et al.

OTC 30602 Offshore LNG and Gas Monetization by Femi Adeoye Alabi, Total

SPE 200147 Development of the Underground Gas Storage and Construction of the Salt Cavern Storage in China by Peng Chen, CNPC, et al.


Ifunanya C. Ekwunife, SPE, is a geoscientist with Baker Hughes working for the Well Integrity Group. In her primary role, she specializes in cased-hole and formation-evaluation data processing and interpretation. Ekwunife’s current role also involves supporting a multidisciplinary team developing innovative predictive well-integrity software. She holds bachelor’s and master’s degrees in geology from the University of Oklahoma. Ekwunife has experience in underground natural gas storage reservoirs, reservoir characterization, and unconventional shale. She is a member of the JPT Editorial Review Committee.