The natural gas industry in the United States has experienced exponential growth in the past several years. Shale gas production has gone from 58 BCF (billion cubic feet) per day in 2008 to 75 BCF per day in 2015. This surge has fostered an increased demand for natural gas in the US. It is an enticing alternative to oil and coal because it is cleaner, cheaper, abundant, reliable, and can help reduce greenhouse gas emissions. In fact, natural gas emits 45% less carbon dioxide than coal and 30% less than oil when combusted.
The US Energy Information Administration projects that natural gas could supply up to 33% of the country’s fuel needs by 2020 compared to just 27% in 2014. And the Administration’s Clean Power Plan strives to make natural gas the primary fuel for the country’s electricity needs. The natural gas industry is working quickly to build the necessary infrastructure to support the country’s rapidly increasing demand, and the general public strongly supports the building of additional pipelines.
Unlike other fuels, natural gas production is not susceptible to energy legislation that might seek to reduce or eliminate its incorporation into the US energy economy. Natural gas is favored by both Republican and Democratic legislatures and, therefore, will prosper regardless of whether conservative or liberal energy policies are enacted. And the 40-page Energy Strategy for America, a plan crafted by the White House delineating the route to sustainable energy in the US, refers to natural gas 91 times, compared to 32 references to wind and 35 references to solar.
An additional source of demand for natural gas production is in the form of liquefied natural gas, or LNF, for export. LNF is poised to become one of the fastest-growing energy markets in the world, with global demand increasing approximately 2% annually until 2040. In fact, BP predicts that demand for LNF will rise to approximately 85 BCF per day in 2038, compared to just 35 BCF per day in 2014.
As global oil prices fall, some are concerned that US LNG export projects might not be profitable, but for companies that already have a long-term LNG supply contract secured, oil prices will not interfere because the contracts are tied to oil price forecasts.
Though recent increases in the price of natural gas and oil have some Americans concerned, they should keep in mind that recent prices have been undervalued, and higher prices translate to increased job growth and revenues. That’s good news for the whole country.