EIAs latest Short-Term Energy Outlook projects that U.S. domestic dry Natural Gas production in 2005 will decline by about 4 percent, due in large part to the major disruptions to infrastructure in the Gulf of Mexico from both Hurricanes Katrina and Rita. Dry gas production is projected to increase by 4.7 percent in 2006. EIA expects net imports of natural gas (Pipeline and liquefied natural gas - LNG) to increase only slightly in 2005 (0.1 percent over 2004) but to increase by over 12 percent in 2006. Imports of LNG appear to have exhibited little change through the first half of 2005 compared to year-ago levels. High natural gas prices in other world markets during the first three quarters of 2005 have served to attract available supplies of LNG that might otherwise have been directed to the United States, although fourth quarter imports are estimated to increase in response to high U.S. prices. Currently, total LNG imports for 2005 are projected to be approximately 650 Bcf in 2005 and just over 1,000 Bcf in 2006, compared to 650 Bcf in 2004.
In the near- to medium-term, EIA expects increases in natural gas production to come mainly from lower 48 sources. Increased use of cost-saving technologies is expected to result in continuing large natural gas finds, including in the deep waters of the Gulf of Mexico but also in onshore fields. In the longer term, Alaskas North Slope fields represent a large potential natural gas source, with an estimated 30-35 Tcf of natural gas resources. Getting the gas to market is the main challenge. One possibility is a $20 billion natural gas pipeline running 3,500 miles from the North Slope along the Alaska Highway into Alberta and on to markets in the U.S. Midwest. In October 2004, Congress promised to cover 80 percent of the projects cost if it were to go bankrupt. Still, the project is considered risky by major energy companies, and it remains uncertain whether or not the project will move ahead.