The U.S. Natural Gas Story in 15 Charts

The story of U.S. natural gas gets referenced a lot but you may not know whats going on. Here are 15 charts that tell the story of the U.S. natural gas market which has been completely changed by the rise of horizontal drilling and hydraulic fracturing.

In the past few years, new technologies and cheaper costs allowed producers to access gas trapped in parts of the U.S. previously considered unreachable.

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Shale gas blasts open world energy market

Unconventional treasure: Shale gas is trapped deep inside rock formations.

Shale gas is a new and abundant source of natural gas, trapped in rock formations. Oil companies have known about it for decades but always dismissed it because it was too expensive and difficult to extract.

In the past few years new technologies that pump water underground to fracture the rock and free the gas have been perfected. The breakthrough has opened a new frontier for the energy industry and turned long-held assumptions about the world’s dwindling supplies on their head.
via Shale gas blasts open world energy market on Propurchaser

Cheap Natural Gas Drives down Costs for Chemicals and Fertilizer

Plunging prices have turned the U.S. into one of the most profitable places in the world to make chemicals and fertilizer, industries that use gas as both a feedstock and an energy source. And they have slashed costs for makers of energy-intensive products such as aluminum, steel and glass.

“The U.S. is now going to be the low-cost industrialized country for energy,” the energy economist Philip Verleger says. “This creates a base for stronger economic growth in the United States than the rest of the industrialized world.

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The U.S. Natural-Gas Boom Will Transform the World

Demand for natural gas has not kept up with the phenomenal growth in supply. Thats indicated by the extremely low current price and the thousands of recently developed unconventional natural gas wells that are shut-in. Unconventional natural gas production from “dry” wells those that dont produce useful petroleum liquid products is at a virtual standstill.

This signals that some recovery in North American natural gas prices is likely—to the range of $4 per thousand cubic feet, perhaps—which would be welcomed by producers. Consumers who heat their homes with gas, and chemical companies and other manufacturers who rely on this raw material for producing petrochemical and polymers, should enjoy several decades of abundant supply.

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US natural gas prices up 60% in 3 months

U.S. natural gas inventory sharply decreased in recent months leading to an increase of Henry Hub gas prices of 60% in three months, to 3.10 dollars per million BTU, against 1.90 dollar last April, when it reached its lowest level in ten years.

Gas demand in the United States has been favored in recent months by a hot summer, driving an increase in electricity consumption for air conditioning, and by low gas prices prompting power plants to shift from coal to gas.

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Challenges in a gas golden age

The golden age of gas has started and the whole world economy should be impacted. The International Energy Agency expects consumption to grow 50% by 2035. It is an energy revolution that no one anticipated five years ago.

The reason is known: by perfecting techniques for extracting unconventional gas, including shale gas, Americans have become in five years the world’s leading producers of gas.

This new technique changes everything. First for the Americans themselves. As producers have not yet allowed to export their gas, prices have collapsed due to overcapacity. At $2 (Btu), the U.S. gas is four times cheaper than in Europe and six times than in Asia. This renewed competitiveness of the United States has caused an economic boom on one hand, with the creation of over half a million direct jobs, and, on the other hand, the relocation of energy intensive industries, such as the chemical and steel industries.

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Why American Natural Gas Will Change The World

In this ‘Tale of Two Cities’ you’ll get $2/MMBtu in New York (Henry Hub) and around $20/MMBtu in Singapore (Asian spot). The divorce between the Atlantic Basin and Pacific Basin couldn’t be any starker – the question is whether these spreads will incrementally narrow under inexorable laws of economics, or whether politics will throw a spanner in the works.

‘Convergence’ makes most sense for the US of course – Chesapeake’s foibles merely mask a structural problem for American gas players; they are selling their gas for a pittance in the US when they could be making an absolute killing overseas, roughly to the tune of $1bn spreads a day in Asia.

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Natural Gas Stages Rally, Not Recovery

The energy worlds most hopeless case just twitched an eyebrow. But natural gas isnt ready to leave intensive care just yet.
Having plunged below $2 per million British thermal units in April, front-month gas futures have since bounced 27%.

This reflects rekindled hopes that bloated gas inventories might moderate. These typically get run down during winter and rebuilt over summer, peaking in late fall.

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Natural gas prices up 5% on production report

The price of natural gas jumped by nearly 5 percent Monday after government data showed that producers are making good on promises to cut supplies. On Monday natural gas futures rose 9.9 cents to end the day at $2.285 per 1,000 cubic feet, the highest since March 21.

The Energy department’s Energy Information Administration reported that the industry’s effort to downshift production appears to be making a difference. Overall production in the U.S. came to 82.36 billion cubic feet per day in February, down 0.8 percent from January. Natural gas production was still 9.3 percent higher than a year ago, but analysts said any production drop was a promising sign.

via Natural gas prices up 5 pct. on production report – BusinessWeek.

Shale Gas: the situation in Europe

As France takes the path of experimentation on shale gas, many European countries have launched investigations for future exploitation. But Bulgaria, Germany and the UK recently froze all exploration.

After commissioning a study on the various regulations and procedures relating to the exploration and exploitation of shale gas in Poland, France, Germany and Sweden, the European Commission estimated that there was no need to introduce new regulations at European level.

According to the institution, in the four countries studied, laws already cover the various issues raised (legal, financial, safety, water, noise …). However, Günther Oettinger, European Commissioner for Energy, previously estimated that harmonization of standards is needed because the situation is very different from one country to another.

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