WASHINGTON — A decade since the start of a shale gas revolution that unlocked new supplies and resulted in a “wholesale turnaround” in U.S. production, the overall size of recoverable gas reserves continues to increase and the pace of production growth is only accelerating, a new report by business information provider IHS Markit says.
IHS Markit expects natural gas production to rise by almost 8 billion cubic feet per day (Bcf/d) or more than 10 percent in 2018 alone. Altogether, U.S. production is expected to grow by another 60 percent over the next 20 years, the report says.
Additionally, IHS Markit now estimates that approximately 1,250 trillion cubic feet (Tcf) of U.S. supply is below $4 per MMBtu Henry Hub price today, up from a previous estimate of 900 Tcf in 2010.
The new report, called The Shale Gale Turns 10: A Powerful Wind at America’s Back, 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.
More than expected
When the shale revolution began a decade ago, the prevailing assumption was that the U.S. supply base was being exhausted and that the country would have to become a major importer of liquefied natural gas (LNG).
Instead, in what the report describes as a “wholesale turnaround,” U.S. output rose by more than 40 percent in that first decade (2007-2017) and real natural gas prices fell by two thirds during the same period.
In contrast to the assumption a decade ago, the U.S. is now on track to become one of the world’s major LNG exporters, the report notes. IHS Markit expects U.S. LNG export capacity to more than double in the next five years and rise to at least 10 Bcf/d by 2023.
“To say that the ‘Shale Gale’ — as IHS Markit originally coined it in 2010 — has been anything but a veritable revolution would be an understatement,” said Daniel Yergin, vice chairman, IHS Markit and co-author of the report. “It represents a dramatic and largely unanticipated turnaround that dramatically changed both markets and long-term thinking about energy.”
Electric power
The most dramatic effect has been on the U.S. electric power industry, the report says. Where coal and nuclear had previously dominated the growth in share of U.S. electric power generation, natural gas has become a “backbone of electric generation” and regularly competes with coal for the largest share of total electric generation.
By 2040, IHS Markit expects natural gas’ share to grow from almost one-third to nearly half of all electricity generated in the United States.
