An abundance of natural gas resources in the U.S., coupled with enhanced drilling techniques, has led to historic increases in natural gas production and delivery of natural gas. This has reduced dependence on foreign natural gas imports.
Production. Natural gas production in the U.S. continues to break records. On December 20, 2014, domestic natural gas production reached a record-setting 73.6 billion cubic feet (Bcf) per day, according to the U.S. Energy Information Administration (EIA). Horizontal drilling and hydraulic fracturing, also known as “fracking,” are innovative techniques for capturing natural gas in shale formations, including the Marcellus Shale, the largest source of natural gas in the U.S.
Covering 104,000 square miles, the Marcellus Shale expands across Pennsylvania, West Virginia, and parts of Ohio and New York. Natural gas production in the Marcellus Shale region exceeded 15 Bcf per day through July 2014, the first time that level was ever recorded by the EIA. Marcellus Shale natural gas production is expected to increase year-over-year.
Imports/Exports. U.S. natural gas imports in 2013 declined for the sixth consecutive year. Total natural gas imports for 2013 were 2,883,355 million cubic feet, which is the lowest level since 1995, according to the EIA. The U.S. is expected to become a major exporter of liquefied natural gas (LNG) in the near future. Jordan Cove in Oregon, the nation’s seventh LNG export terminal, was recently approved. LNG exports are expected to begin in late 2015.
Supply/Demand. Natural gas storage levels in the U.S. were historically high in October 2012, but extreme winter weather in late 2013 and early 2014 substantially increased natural gas demand for heating, which depleted storage inventories. As the power sector increased demand for natural gas to generate electricity, the amount of natural gas in storage steadily plummeted to 822 Bcf, which was an 11-year low, by the end of the storage withdrawal season in April 2014. Record-breaking storage injections were needed to replenish historically low natural gas storage levels in time for this winter’s heating demand, which began in November 2014.
Summer 2014 produced the largest natural gas storage injections ever recorded by the EIA. Weekly storage injections, which typically occur in May through October each year, were historically high in 2014. Injections were greater than 100 Bcf for eight consecutive weeks during the 2014 summer months. Below-normal temperatures across the U.S. during summer 2014 contributed to large storage injections, as the power sector’s demand for natural gas-fired generation weakened. Industry experts are confident that storage levels are sufficient to meet winter heating demand.
Gas demand for heating and power generation is projected to increase steadily. Consumer demand for gas and electricity are typically synchronized. Electricity price trends are closely linked to the natural gas market. Winter weather across the U.S. in 2013-2014 produced the most volatile natural gas daily price swings in several years, and electricity prices climbed, as well.
Stabilize energy costs
Achieving budget certainty now for this winter’s gas and electricity costs is a prudent business decision. For more information, contact the MTI-endorsed consulting firm, APPI Energy, at 800-520-6685 or info@appienergy.com.