UPDATE 1-EIA sees US natgas production down 3.8 pct in 2010

(Adds details on electric power demand decline, price outlook)

NEW YORK, Nov 10 (Reuters) - The U.S. Energy Information Administration on Tuesday slightly raised its estimate for domestic natural gas production in 2009, but said reduced drilling and declining well productivity should result in sharply lower output next year.

Marketed natural gas production was expected to be up 2.8 percent in 2009 to 59.72 billion cubic feet per day, primarily due to strong first-half output. Production would then decline by 3.8 percent in 2010 to about 57.46 bcf daily, EIA said in its November Short-Term Energy Outlook.

U.S. natural gas consumption this year is forecast to average about 62.18 billion cubic feet per day, down 1.9 percent from last year's daily rate of 63.37 bcf, EIA said.

Gas demand in 2010 was expected to slip 1.1 percent to about 61.49 bcf per day as gains in residential, commercial and industrial use next year are more than offset by a large decline in the electric power sector.

The anticipated addition of new coal-fired power generating capacity next year combined with higher natural gas prices should reverse the coal to natural gas switching trend that accounted for a large increase in electric power sector demand this year, the agency said.

The Henry Hub spot price was expected to average about $4.03 per million British thermal units in 2009, down 56 percent from 2008's record high average of $9.12, then climb 24 percent next year to $5.01. (Reporting by Joe Silha; Editing by Lisa Shumaker)