Gas utilities and state commissions must work together to help preserve rates of return, encourage conservation, and lower customers’ bills.
Clear Skies for Gas
Unconventional sources brighten the U.S. supply outlook.
The future of natural gas supplies in the United States looks promising due to rising projections of recoverable resources, including unconventional production. A strong supply outlook bodes well for using natural gas as a low-emission transportation fuel.
This article deals with the vastly improved outlook for U.S. natural gas supply as a result of sharp increases in recent projections of the total of proved reserves and unproved technically recoverable resources, as well as of unconventional naural gas production. On this basis, the article’s original draft concluded that natural gas prices would remain in the $7.00 to $7.50/million Btu range. In fact, New York Mercantile Exchange natural gas futures dropped into the $5.00 to $6.00/million Btu range in mid-November 2008 and remained in this range throughout December 2008 and the first half of January 2009, while the two benchmark crude oil prices—West Texas Intermediate and North Sea Brent—dropped to roughly $37 to $46 per barrel, their lowest level in the past four years.
On Aug. 11, 2008 the American Clean Skies Foundation (ACSF), a little known organization, released a study that concluded the United States has 2,247 trillion cubic feet (Tcf) of natural gas proved reserves and unproved technically recoverable resources equivalent to 118 years at current production levels. This would be equivalent to 19.04 Tcf/year, which is less than the actual production of 19.278 Tcf/year in 2007, according to the Energy Information Administration (EIA), including major contributions from unconventional resources. 1 Unconventional natural gas consists of gas from tight sands, coal-bed methane and especially from Devonian shale. 2 The 2,247 Tcf greatly exceeds the Dec. 31, 2006 value published by the Potential Gas Committee of the Potential Gas Agency of 1,320.950 Tcf, which includes 166.141 Tcf of coal-bed methane. 3 Adding the Dec. 31, 2006 proved reserves in the lower 48 states of 200.840 Tcf and 10.245 Tcf in Alaska for a total of 211.085 Tcf, 4 the grand total Potential Gas Committee estimate is 1,532.035 Tcf. For some reason, the Potential Gas Committee used a value of only 204 Tcf for proved reserves, which the author corrected in an article published in the Feb. 4, 2008 edition of the Oil & Gas Journal .5
It is well known that unconventional natural gas has contributed a rapidly increasing share of U.S. natural gas production, but never before has this contribution been projected at such a high level—currently 50 percent of total dry gas production according to a recent article in the Oil & Gas Journal .6 This new assessment clearly changes the outlook for U.S. natural gas use in the U.S. energy system and appears to have already contributed to a sharp decrease in New York Mercantile