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UPDATED 1 Sept: The EI library in London is temporarily closed to the public, as a precautionary measure in light of the ongoing COVID-19 situation. The Knowledge Service will still be answering email queries via email , or via live chats during working hours (09:15-17:00 GMT). Our e-library is always open for members here: eLibrary , for full-text access to over 200 e-books and millions of articles. Thank you for your patience.
Low natural gas prices are here to stay – IHS
Low natural gas prices resulting from the development of unconventional gas resources in North America will hold for the long term, and this will create opportunities to expand the economic benefits and cost savings to consumers through greater direct natural gas use. Increased use of natural gas also has the potential to contribute to energy efficiency and emissions reduction goals.
These are the conclusions of a report from IHS – Fueling the future with natural gas: Bringing it home. The report says that the Henry Hub price of natural gas is expected to remain in the range of $4–5 per million British Thermal Units (BTU) (in constant 2012 dollars) on an annual average through 2035.
The study’s conclusion is based on estimates from IHS that 900tn cubic feet of unconventional gas resources – nearly one third of the total recoverable resource base – can be produced economically. This means that the North American natural gas resource base can accommodate significant increases in demand without requiring a significantly higher price to elicit new supply, says the report.
‘The newly abundant natural gas resource base presents an opportunity to rethink our approach to natural gas use,’ said Tim Gardner, IHS Vice President and Global Head of Power, Gas, Coal and Renewables. ‘In the past, when natural gas was thought to be a scarce resource, we tried to limit its use. Now that technology has greatly expanded our ability to produce natural gas at relatively low cost, we can look for more ways to capitalise on the economic, efficiency and environmental advantages that natural gas offers.’
The study suggests that increasing prices of other fuels such as heating oil in the US means that there are incentives to replace existing electric and oil appliances in the country with gas for space and water heating. This is already happening in some areas, including New York. The study also suggests that this switch will lower emissions in the country.
The study observes that many existing regulatory frameworks were developed in the past when natural gas was considered a scarce resource whose use should be discouraged. As a result, these should be revised, says the report.
