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US production to rise 60% in the next 20 years

The US is on track to becoming one of the world’s largest LNG exporters, as the overall size of recoverable gas reserves continues to swell and the pace of production accelerates even further, according to a new report by IHS Markit.

In its Shale gale turns 10: A powerful wind at America’s back report, IHS Markit predicts that natural gas production will rise by more than 10% – almost 8bn cf/d. In total, US production is anticipated to grow by 60% over the next 20 years.

he consultancy also anticipates that approximately 1,250tn cf of US supply is economic below $4/mn Btu Henry Hub price today – up from a previous estimate of 900tn cf in 2010.

The report assesses the impacts of the first 10 years of the unconventional gas revolution – unlocked through the combination of hydraulic fracturing and horizontal drilling technologies – and its future potential. When the shale revolution began 10 years ago, it was widely believed that the US supply base was being ‘exhausted’ and would force the country to become a major importer of LNG, the report highlights.

Instead, the first decade saw US LNG output rise by more than 40%, with prices for real natural gas falling by two thirds. US LNG capacity is anticipated to more than double in the next five years, adds the report.

The most dramatic effect of the shale revolution has been on the US electric power industry. Whereas previously, coal and nuclear dominated growth share in US electric power generation, natural gas has become its ‘backbone’, states the report, and regularly competes with coal for the largest share of total electric generation. By 2040, IHS Markit expects natural gas share to grow by from almost one third to nearly half of all electricity generated in the US.

The report also observes that the ‘shale gale’ – a term coined by IHS Markit in 2010 –  has made a major contribution to reducing CO2 emissions. In 2017, CO2 emissions from power generation were down 30% from 2005, IHS Markit estimates, with more than half of that emission decline from gas replacing goal.

Following the same pattern as natural gas, oil output also soared to have an ‘enormous global impact’ a few years after the LNG boom, the report notes. Between 2008 and 2018, US oil output more than doubled and exceeded the previous record set in 1970. On a net basis, the US went from importing 60% of its liquid fuel at the peak to below 16% in 2018 – and the share is continuing to fall, adds the report. The US is now on track to being the world’s largest oil producer, overtaking Russia and Saudi Arabia, by early next year.

The report also warns that the combined developments of unconventional oil and gas have had far-reaching impacts for the manufacturing sector and US economy as a whole.

From 2012–2020, IHS Markit estimates that more than $120bn in new capital investments will be spend to expand US petrochemical manufacturing capacity – a result of ‘abundant and inexpensive’ natural gas and natural gas liquids providing advantages in terms of thermal energy, feedstock and electricity costs. 

Sam Adrus, Executive Director of IHS Markit, comments: ‘The new outlook for natural gas cost and availability has created new possibilities for progress towards national goals of energy efficiency, cost efficiency, environmental protection and energy security.’

News Item details


Journal title: Petroleum Review

Countries: USA -

Subjects: Gas markets, Oil markets, Shale gas, Forecasting, Carbon emissions

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