NEW YORK, Aug 11 (Reuters) - The U.S. Energy Information Administration said Tuesday it expected domestic natural gas consumption in 2009 to drop 2.6 percent from 2008 levels, primarily due to a sharp drop in industrial activity.
In its August Short-Term Energy Outlook, EIA said domestic gas consumption this year will average about 61.76 billion cubic feet per day, down from 63.41 bcf daily in 2008.
EIA said natural gas prices this year have fallen to the point where gas has been competing against coal for a share of baseload generation, leading to an expected 2 percent demand gain this year from the electric power sector,
But the severe economic contraction this year has sharply cut usage in other sectors, primarily from industry where demand is expected to decline 8.6 percent this year.
EIA said improved economic conditions in 2010 should lead to a 0.5 percent increase in overall gas consumption, with the residential, commercial and industrial sectors all gaining.
Higher gas prices in 2010, expected to rise 40 percent to $5.48 per thousand cubic feet, will likely lead to a slight decline in consumption from the electric power sector.
EIA forecast U.S. marketed natural gas production this year will be nearly flat from 2008 at about 58.65 billion cubic feet per day, but that estimate is up from last month's forecast of about 58.23 bcf daily.
EIA said the low price environment has brought about a significant pullback in drilling activity that has slowed marketed gas production in recent months.
EIA also said it expected production to drop in 2010 despite a pickup in drilling, declining 2.8 percent to 56.98 bcf per day. (Reporting by Joe Silha; Editing by Lisa Shumaker)
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