Henry Hub Price

Summary

The Henry Hub price averaged US$2.41 per million British thermal units (MMBtu) in 2024, marking a decrease of 9.7% from 2023.

In the base case, the Henry Hub price is forecast to rebound to US$3.80/MMBtu in 2025, then increase to US$3.90/MMBtu in 2026, reaching US$4.59/MMBtu by 2034.

Under the tariff case, the Henry Hub price is expected to average US$3.20/MMBtu in 2025, reaching US$4.37/MMBtu by 2034.

Based on the low- and high-price cases, prices are projected to range from US$2.28/MMBtu to US$8.78/MMBtu by 2034.

In 2024

U.S. production: U.S. total natural gas production remained relatively steady at an estimated 113.2 billion cubic feet per day (Bcf/d) (3.2 billion cubic metres per day [m3/d]), according to the U.S. Energy Information Administration, representing a 0.3% increase compared with 2023. Dry natural gas production, similar to the AER’s definition of marketable gas, eased 0.3% from 2023 due to some gas producers curtailing production in response to lower prices. However, this slight decline was offset by a 7.7% growth in gas production associated with oil wells, also known as associated gas.

U.S. demand and exports: Natural gas consumption in the U.S. rose by 1.1% in 2024 to 90.4 Bcf/d (2.5 billion m³/d), driven by increased demand from electrical power generation. U.S. natural gas exports increased by 1.0%, with higher liquefied natural gas (LNG) exports and natural gas pipeline exports to Canada and Mexico.

Base Case Forecast for 2025 to 2034

U.S. production and demand: The Henry Hub price is anticipated to modestly rebound in 2025 due to colder winter weather and a decline in inventories. This increase is driven by modest domestic demand growth from residential use and power generation plus LNG capacity expansions (see next section). U.S. natural gas production is expected to rise to meet the growth in demand. In 2026 and 2027, U.S. demand growth is projected to accelerate; however, solid production growth will limit price gains. Associated gas production is expected to rise as oil production increases due to higher forecasted oil prices. From 2028 onwards, natural gas prices are forecast to increase, fuelled by growth in power generation and industrial demand.

U.S. exports and imports: Natural gas exports from the U.S. are anticipated to rise over the forecast period. U.S. LNG capacity is expected to expand by 46%, with three new LNG plants ramping up production or coming online between December 2024 and January 2027. Plaquemines LNG and Corpus Christi LNG Stage 3 began operations in December 2024, while Golden Pass LNG is expected to come online in mid-2026. From 2027 onwards, U.S. LNG capacity is expected to grow further as the new U.S. administration has lifted the LNG export permit freeze that was put in place in early 2024. Additionally, natural gas pipeline imports from Canada are expected to revert to the decreasing trend, which began in 2008, as U.S. domestic natural gas production rises.

One-Year Tariff Scenario (Tariff Case)

Despite diplomatic efforts, the U.S. has imposed tariffs on many countries, including Canada, Mexico, China, and the European Union, sparking a broad-ranging trade war starting in the first half of 2025 and lasting for one year. Back-and-forth tariff retaliation is expected. China has announced its plans to reduce imports of U.S. LNG in response. The resulting trade disruptions will moderate global natural gas demand growth, leading to an average Henry Hub price of US$3.20/MMBtu in 2025, a 16% decline relative to the base case forecast. As tariffs come off in 2026, the Henry Hub price is anticipated to increase to US$3.50/MMBtu, reaching US$4.37/MMBtu by 2034, 4.8% lower than the base case forecast. All other natural gas supply and demand assumptions are unchanged compared with the base case forecast.

Low- and High-Price Cases

The low- and high-price cases capture near- and long-term volatility of the Henry Hub price and are estimated using a 95% confidence interval. The following factors were captured in the price cases:

Low-price case:

• North American demand is less than expected due to a potential economic recession.
• U.S. natural gas production growth is faster than expected.
• More associated gas is produced as significantly more oil wells are drilled than expected in the near term.
• LNG capacity grows slower than expected.

High-price case:

• North American demand rises more than expected due to stronger economic growth.
• U.S. natural gas production growth is slower than expected.
• Less associated gas is produced as significantly fewer oil wells are drilled than expected in the near term.
• Switching from coal to natural gas for power generation and industrial electrification accelerates in the U.S.