September 22, 2016 – SNL Energy
Natural gas industry deemed healthy but needs to be proactive
By: Tom Pawlicki
Natural gas production growth has surpassed most predictions made in the last five to 10 years, but the industry needs to continue its outreach to skeptics in order to show the value and importance it has to the country.
Shale has created abundance
Production of dry natural gas in the U.S. will rise from a level of 55.08 Bcf/d in 2008 to a projected 76.14 Bcf/d in 2017, according to data in the U.S. Energy Information Administration's "Short-Term Energy Outlook."
The arrival of massive quantities of shale natural gas starting around 2008 caused prices to crater and put the market in abundance ever since, according to Rick Smead, managing director at RBN Energy LLC.
In 2008, the EIA projected that the U.S. would be importing 7.8 Bcf/d, but they are now suggesting that the U.S. will export 13.9 Bcf/d by 2030, Smead said at the LDC Gas Forum in Chicago on Sept. 12.
"The swing between those two is 21.7 Bcf/d, which is more than two Qatars," Smead said. "So we have added effectively more than two Qatars to the LNG markets because of this abundance. Abundance came on so suddenly that the industry is still kind of in shock."
The extra gas that has been produced since the late 2000s is also seen in the EIA's "Annual Energy Outlook," in which Smead said that production expectations through 2030 were revised up nearly 55 Bcf/d between the 2010 and 2016 reports.
Extra gas was also assisted by the development of wet gas production, which helped total natural gas output rise above 70 Bcf/d.
"If wet gas and associated production had stayed flat from 2010, then we would be at least 10 Bcf/d short from where we are now," Smead said. "So if oil production and development recovers, you start getting a lot of free associated gas coming to the market, which holds prices way down and bolsters everybody's supply balance."
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