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Time Series Modeling for U.S. Natural Gas Forecasting
Faced with diminishing supplies of domestic crude oil and increased demand for energy, the US has come to rely on imported crude and domestic supplies of natural gas. During the last decade US natural gas production has risen about 10%, but it still fails to meet demand. This failure has resulted in significant increases in natural gas prices. We believe that developing a reliable method to forecast US natural gas production rates and reserves will benefit gas producers, consumers and policy makers. This paper presents one methodology for developing forecasting models for predicting U.S. natural gas production, proved reserves, and annual depletion to year 2025 using a stochastic (time series) modeling approach. The methodology is not mechanistic. A mechanistic model would examine individual geologic settings, exploration success, the physics of gas production and the rate of exploitation for provinces, basins, and reservoirs. However, to do so would result in an extraordinarily massive model that would be difficult, if not impossible, to develop and use. Instead we used a simpler approach which takes advantage of established trends in easily obtained published data. Various time series models were tested and validated using data that are not used in the mathematical development of the models. Having adequately validated these time series models using historical data we believe that they can be used to make at least short time forecasts. Comparison of results of this study with other published forecast is also presented. Our forecasts show that U.S. gas production rate will maintain a production plateau of 18.7 Tcf/yr from 2005 to 2008 after which gas production will increase gradually from 19.0 Tcf/yr in 2010 to reach 22.5 Tcf/yr in 2025. We predict that U.S. gas production will have an average annual rate of increase of 0.5% from 2005 to 2015 after which the average annual rate of change of production will increase to 1.2% for the period of 2015 to 2025. Our forecasts also show that U.S. gas depletion rate will increase from 10.6%/yr in 2005 to 13.4%/yr in 2025. While the reserves discovery rate increases, U.S. gas proved reserves are predicted to increase from 197 Tcf in 2005 to 215 Tcf in 2010. Afterwards, the gas proved reserves will increase at an annual rate of 1.3% and are expected to reach 263 Tcf in 2025.