What Is The Future Potential Of Natural Gas?

According to the IEA’s newest quarterly Gas Market Report, which also includes a new medium-term prediction, global gas consumption is predicted to rise by 3.6 percent in 2021 before dropping to an average growth rate of 1.7 percent over the next three years. Demand is expected to increase by 7% by 2024 compared to pre-Covid levels in 2019.

Is there a future for natural gas?

Supplies began to run out in the years following 2000, and gas prices continued to rise. The next unconventional resource is shale gas, which extracts gas from extremely tight shale rocks. It took a long horizontal well, fracked several times along its length, to expose huge sections of the shale and allow enough gas molecules to percolate to the well.

Mitchell Energy and Devon EnergyDVN proved shale gas in the Barnett Shale, and it swiftly expanded to other shale basins in the US. Natural gas prices had been steadily rising and had reached $7 per thousand cubic feet (Mcf) before growing shale gas knocked it down to below $4/Mcf in 2009, where it stayed for the most part until 2021. (Figure 1).

In the early 2000s, coalbed methane in Wyoming’s Powder River basin was at its peak, with over 24,000 wells drilled. However, many stranded and abandoned coalbed methane wells have attested to the price drop since then.

Shale gas was a game-changer.

The United States has surpassed Russia as the world’s top gas producer.

Long horizontal wells, a new technology, were quickly used in the United States to improve oil output. It resulted in the United States becoming self-sufficient in oil and gas for the first time since 1947.

The low cost of shale gas prompted industry to switch from coal to gas-fired power facilities. Gas burns far cleaner than coal, resulting in considerable reductions in greenhouse gas (GHG) emissions, to the point that the United States met the Paris Agreement agreed in 2015.

However, additional investigations revealed that the claimed advantage of burning gas over coal was only valid if gas leakages in wellheads and pipelines were less than 2% of the gas passing through the pipes. The explanation was simple: gas leaks emit methane, which has a warming effect of 21-80 times that of carbon dioxide, the primary GHG released when coal, natural gas, or gasoline are burned.

Natural gas is not an effective substitute for coal-fired power stations if gas leakage reach 3%. Now, if the leaks are measured and rectified, as EDF (Environmental Defense Fund) has advocated in recent years, gas can become a valuable bridge to the future, as the oil and gas business has advocated. This realization has sparked a large-scale effort to seal gas leaks in wells, pipelines, gas processors, and other oil and gas infrastructure.

Liquefied natural gas (LNG) has just recently been exported from the United States. The United States is presently the world’s third largest LNG exporter, trailing only Australia (LNG from coalbed methane) and Qatar. LNG shipments are primarily exported out of Gulf Coast ports like Sabine Pass, Louisiana.

Jack Fusco, the CEO of Cheniere Energy, revealed some impressive data about a month ago. Natural gas was $2/Mcf in the United States, Europe, and Asia during the pandemic, he claimed (Figure 2). However, as economies flourished and businesses around the world sought gas for the clean energy transition, gas demand soared.

In September, prices in the United States were $5/Mcf, whereas in Europe and Asia, they were $20/Mcf. His company exports LNG and has nearly sold out of LNG production for the next 20 years.

For many years, Russia, the world’s second-largest gas producer behind the United States, has sold natural gas to Europe. Germany has traditionally received 40% of its gas from Russia. Some of this gas is delivered via a pipeline that runs through Ukraine, and some is delivered via the Nord Stream 1 pipeline that runs beneath the Baltic Sea.

Nord Stream 2 is a twin pipeline that was constructed just last month and is on the same track as its sister. Gazprom, the Russian state-owned enterprise, owns 100% of this new pipeline and also owns 51% of Nord Stream 1. A collection of European energy corporations, including Shell, is paying half of the $11 billion construction costs for Nord Stream 2.

This is where geopolitics comes in. Because it believed that more Russian gas would indicate too much Russian influence, as well as fewer LNG shipments from the US to Europe, the US imposed sanctions on Russian corporations. Because of the Solar Wind cyber attacks, Washington is likely to slap new sanctions on Russia, but Nord Stream 2 will not be targeted this time, ostensibly to restore relations with Germany.

Due to tensions with Russia over the ongoing crisis in eastern Ukraine, Ukraine is concerned that gas and pipeline lease money will be transferred to Nord Stream 2.

Due to lower storage and greater home heating expenditures in the coming winter, gas prices are rising in Europe and the United Kingdom. The shortfall is the result of a lack of long-term contracts between Europe and Gazprom, as well as a quick recovery following the Covid epidemic.

According to the International Energy Agency, Russia might be a trusted partner and even allow gas shipments to climb 15% to alleviate Europe’s gas supply shortage. With the launch of Nord Stream 2, Russia appears to have hinted at a deal.

Natural gas, oil, and coal industries have long contended that it is a bridge to renewable energy since it burns cleaner (emits less CO2) than coal and oil. That is correct.

However, this was before gas leaks in wells and pipelines reduced natural gas’s net GHG benefit over coal in power plants. Methane, the escaping gas, is 25 to 80 times more harmful than CO2 depending on whether it is released in the short or long term.

Since then, a concerted effort to reduce methane leakage from oil and gas operations has gained traction. EDF has exerted a significant influence by meticulously measuring methane emissions and demonstrating that they are greater than previously estimated levels, as well as by pressing for the installation of trustworthy measurement equipment to address the problem. As a result, if the leaks can be located and repaired, natural gas could be a viable option for a carbon-free future.

Indeed, BP has forecasted a bright future for natural gas, predicting that it will provide 22% of primary energy by 2050 “compared to 45 percent for renewables in their “Rapid Future” scenario. According to DNV, gas will remain relatively stable between 2020 and 2050, whereas oil and coal will begin to decline in 2025.

LNG is supplied to other nations to help them transition from coal to natural gas and reduce their greenhouse gas emissions. China imports a lot of LNG from the United States, but they continue to build new coal power plants, purportedly to save employment because they mine a lot of coal, but also to help the poorest and less developed portions of their vast economy.

The most recent twist is the addition of an RSG label to LNG (responsibly-sourced gas). RSG is gas that has a minimal carbon footprint since methane leaks in wells, pipelines, and tanks are kept to a minimum, if not zero. This is the start of a new trend.

A BP vessel recently delivered2 their latest LNG cargo to Southeast Asia, which was verified as safe “LNG with a carbon offset. They calculated all GHG emissions from well production to terminal unloading and retired corresponding credits from the company’s internal carbon-trading portfolio.

PureWest Energy, Wyoming’s largest natural gas producer, recently became the first company in the United States to offer RSG to its consumers.

Project Canary, an evaluation firm, gave PureWest a platinum rating for gas generated in the previous quarter. This certification covered the carbon-neutral footprint of gas wells, as well as gas transmission and storage. According to the CEO, this is the cleanest natural gas in terms of greenhouse gas emissions.

Renewable natural gas, or RNG, is another recent trend in the oil and gas business. RNG is commonly defined as gas produced from agricultural waste. ChevronCVX has announced a greater investment in biomethane gas from dairy products, in collaboration with Brightmark, an agricultural waste firm. Chevron plans to sell RNG as compressed natural gas for use in autos. It’s a positive step toward decarbonizing agriculture.

To summarize, natural gas has evolved from sandstones for much of its history in the United States to modern-day unconventionals such tight gas, coalbed methane, and shale gas. On the geopolitical scene, natural gas also manages to thrive. More recently, gas has demonstrated its versatility by adopting new labels like RSG and RNG, which will aid the world in overcoming the obstacles of the transition to renewable energy sources.

1. The Story of Man, by Cyril Aydon (Philadelphia: Running Press, 2007).

2. news from bp

Strong Optimism in the Near Term

Energy business equities are up 50% year to far until late October 2021, despite the global energy crisis, thanks to high commodity prices. Investors expect prices to stay strong, according to the results of our study. Oil prices are expected to remain over $60 per barrel through 2024, according to 70% of respondents. This is much higher than the majority of investors predicted in last year’s study, who expected oil to cost between $40 and $60 per barrel.

Investors, in particular, are bullish on natural gas: 85 percent believe it will play a crucial role as a bridge fuel between traditional hydrocarbons and renewable energy sources in helping the world decarbonize, and 70 percent want oil and gas businesses to pursue natural gas growth. These findings are a strong signal of increased support for continuing investment as part of longer-term capital allocation strategies for management teams seeking clarity on how natural gas fits into their portfolios.

What does the future hold for natural gas?

  • The Henry Hub natural gas spot price was $6.59 per million British thermal units (MMBtu) in April, up from $4.90 in March and higher than the $2.66/MMBtu average in April 2021. The Henry Hub price is expected to average $7.83/MMBtu in 2Q22 and $8.59/MMBtu in 2H22. The high anticipated natural gas prices reflect our anticipation that natural gas storage levels will be lower this summer than the five-year average (20172021). Limited opportunities for natural gas-to-coal switching for power production contribute to lower-than-average storage levels, which we expect to maintain natural gas demand for power generation strong despite high prices. If summer temperatures are hotter than expected and energy consumption is higher, natural gas prices could soar dramatically above projected levels. Furthermore, we anticipate that liquefied natural gas (LNG) shipments from the United States will stay high throughout the summer. In 2023, we predict the Henry Hub spot price to average $4.74/MMBtu. The 2023 price prediction reflects our expectation that natural gas production would rise next year, but LNG export and demand growth will decelerate, resulting in greater storage levels in 2023 than in 2022.
  • Natural gas stockpiles were estimated to be 1.6 trillion cubic feet (Tcf) at the end of April, which is 17% lower than the five-year average. At the end of April, inventories were 190 billion cubic feet (Bcf) greater than they were at the end of March. Because of below-normal temperatures, which increased demand for natural gas for heating despite relatively flat output, this increase was below the five-year average. Natural gas inventories are expected to rise by 418 Bcf in May, bringing the month’s total to 2.0 Tcf, which is 14% lower than the five-year average for this time of year. Natural gas inventories are expected to complete the 2022 injection season (end of October) at around 3.4 Tcf, which is 9% lower than the five-year average. Summer temperatures, on the other hand, will be critical to storage, and a hotter-than-normal summer with high energy demand could result in smaller stockpiles and higher prices than expected.
  • Exports of US LNG averaged 11.6 billion cubic feet per day (Bcf/d) in April, slightly lower than the all-time high of nearly 12.0 Bcf/d recorded in March. From May to August, we expect US LNG exports to average 12.1 Bcf/d, which is slightly lower than our earlier prediction. This projection includes a little reduced LNG demand in Asia and Europe this summer compared to our prior forecast, owing in part to the continuation of high natural gas prices. We estimate that US LNG shipments will average 12.0 Bcf/d this year, up 23% from 2021. Capacity expansions have propelled LNG export growth in recent years. However, we do not anticipate any additional export facilities coming online during the forecast period, thus growth in LNG exports is expected to drop to 5% in 2023, with LNG exports averaging 12.6 Bcf/d.
  • Natural gas consumption in the United States is expected to reach 85.7 Bcf/d in 2022, up 3% from 2021. Colder temperatures and higher usage in the residential and commercial sectors in 2022 compared to 2021 are to blame for the increase in natural gas consumption in the United States. In response to increased economic activity, we predict the industrial sector to consume more natural gas in 2022. Furthermore, despite high natural gas prices, anticipated natural gas usage in the electric power industry is expected to rise in 2022 due to minimal natural gas-to-coal switching. We anticipate that natural gas consumption would average 85.3 Bcf/d in 2023, down 1%, owing to assumed milder winter temperatures (based on National Oceanic and Atmospheric Administration forecasts) that will reduce residential and commercial use.
  • We estimate that dry natural gas output in the United States averaged 95.5 Bcf/d in April, up 0.4 Bcf/d from March. Despite the fact that production in April was lower than it was in December 2021, it has increased in each of the previous two months. Production increases in April were limited compared to March due to below-normal temperatures and snow in certain producing locations, as well as regular pipeline maintenance. In May, dry natural gas output is expected to average 95.8 Bcf/d, according to our projection. Dry natural gas output is expected to average 96.7 Bcf/d in 2022, which is 3.2 Bcf/d higher than in 2021. In 2023, we anticipate dry natural gas output to average 101.7 Bcf/d.

How long will natural gas be available?

According to the US Energy Information Administration’s Annual Energy Outlook 2022, there were approximately 2,926 trillion cubic feet (Tcf) of technically recoverable resources (TRR) of dry natural gas in the United States as of January 1, 2020. If dry natural gas output in the United States remains constant at around 30 Tcf in 2020, the country will have enough dry natural gas to last roughly 98 years. The length of time the TRR will last is determined by the amount of dry natural gas produced and future changes in natural gas TRR.

Proven reserves and unproven resources are included in technically recoverable reserves. The projected amounts predicted to be produced with reasonable certainty under current economic and operating conditions are known as proved reserves of crude oil and natural gas. Unproved crude oil and natural gas resources are amounts that are anticipated to be theoretically recoverable without regard to economics or operating circumstances, based on current technology. According to the EIA, the United States had 464 Tcf of proved reserves and 2,460 Tcf of unproved reserves of dry natural gas as of January 1, 2020.

TRR estimates are very speculative, especially in areas where few wells have been drilled. As new geological knowledge is gathered through more drilling, long-term productivity for existing wells is clarified, and the productivity of new wells grows with technical advances and better management techniques, early estimations tend to vary and shift dramatically over time. TRR projections for each Annual Energy Outlook are based on the most recent well production statistics as well as information from other federal and state government agencies, industry, and academia.

For further information, go to:

Table 2 shows the technically recoverable dry natural gas resources in the United States as of January 1, 2022.

Reference case forecasts for annual dry natural gas output in the United States out to 2050 in the Annual Energy Outlook.

Other FAQs about Natural Gas

  • A kilowatthour of electricity is generated using how much coal, natural gas, or petroleum?
  • In the United States, how much shale gas is produced?
  • What do you think the price of home heating fuel will be this winter?
  • How much does it cost to produce electricity using various power plants?
  • Does the EIA have data on natural gas and oil pipelines in the United States?
  • In each condition, what sorts and amounts of energy are produced?
  • What should I budget for heating this winter?
  • How much of the carbon dioxide produced in the United States is due to power generation?
  • Is the EIA able to provide data on energy use and prices for cities, counties, or zip codes?
  • What are the main influences on natural gas prices?
  • What are the differences between Ccf, Mcf, Btu, and therms? What is the best way to convert natural gas costs from dollars per Ccf or Mcf to dollars per Btu or therm?
  • Which states use the most natural gas and produce the most?
  • How big are the world’s natural gas reserves?
  • In the Weekly Natural Gas Storage Report, how does EIA determine the year-ago and five-year averages?
  • What is the current state of natural gas in the United States, and how long will it last?
  • Is data on shale gas and coalbed methane production and reserves published by the EIA?
  • Does the EIA provide state-by-state estimates or projections for energy output, consumption, and prices?
  • In the United States, how many alternative fuel and hybrid automobiles are there?
  • What is the energy source for power generation in the United States?
  • Why am I paying more for heating oil or propane than what is listed on the EIA website?
  • What is the cost of natural gas for electric power generators in the United States?
  • Does the EIA have data on energy production at the county level?
  • In the United States, how much natural gas is consumed?
  • Is the EIA aware of any unplanned disruptions or shutdowns of energy infrastructure in the United States?

Is it wise to invest in natural gas stocks?

Is it wise to invest in natural gas? Due to oversupply and variable pricing, natural gas investment has been difficult in recent years. Demand for the cleaner fuel, on the other hand, is expected to increase in the future years, benefiting natural gas supplies. As a result, it could be a sound long-term investment.

Are Natural Gas Prices Set to Rise in 2021?

The price in April will be determined by international pricing from January to December 2021. According to AK Jana, managing director of Indraprastha Gas Ltd, every dollar increase in domestic natural gas prices will necessitate a Rs 4.5 per kilogram increase in CNG prices. This translates to a Rs 15 per kg increase in CNG prices.

Why are natural gas futures increasing in price?

In an explosive start to the work week, natural gas futures rocketed beyond $8.000/MMBtu. The May Nymex gas futures contract finished at $7.820, up 52.0 cents from Thursday’s close, on greater weather-driven demand growth, rebounding LNG feed gas deliveries, and storage adequacy concerns.

Are Natural Gas Prices Set to Rise in 2023?

The prediction for September 1st is 7.56. The maximum price is $8.34, while the lowest price is $7.54. For the month, the average price was $7.85. Natural gas prices ended the month at $7.94, up 5.0 percent from September.

The prediction for October 1st is 7.94. The maximum price is $8.76, while the lowest price is $7.92. For the month, the average price was $8.24. Natural gas price ended the month at $8.34, up 5.0 percent from October.

The prediction for November 1st is 8.34. The maximum price is $8.34, while the lowest price is $7.52. For the month, the average price was $8.03. Natural gas prices ended the month at $7.92, a -5.0 percent decrease from November.

The prediction for December 1st is 7.92. The maximum price is $8.74, while the lowest price is $7.90. For the month, the average price was $8.22. Natural gas price ended the month at $8.32, up 5.1 percent from December.

The prediction for January 1st is 8.32. The maximum price is $8.32, while the lowest price is $7.51. For the month, the average price was $8.01. Natural gas prices ended the month at $7.90, a -5.0 percent decrease from January.

The prediction for February 1st is 7.90. The maximum price is $7.90, while the lowest price is $7.13. For the month, the average price was $7.61. Natural gas prices ended the month at $7.51, a -4.9 percent decrease from February.

The prediction for the first week of March is 7.51. The maximum price is 7.51, while the smallest price is 6.77. For the month, the average price was $7.23. Natural gas price ended the month at $7.13, down 5.1 percent from March.

The forecast for the first week of April is 7.13. The maximum price is $7.86, while the lowest price is $7.12. For the month, the average price was $7.40. Natural gas prices ended the month at $7.49, up 5.0 percent from April.

The forecast for the first week of May is 7.49. The maximum price is $8.25, while the lowest price is $7.47. For the month, the average price was $7.77. Natural gas prices ended the month at $7.86, up 4.9 percent from May.

The forecast for the first week of June is 7.86. The maximum price is $8.66, while the lowest price is $7.84. For the month, the average price was $8.15. Natural gas price ended the month at $8.25, up 5.0 percent from June.

The forecast for the first week of July is 8.25. The maximum price is $9.09, while the lowest price is $8.23. For the month, the average price was $8.56. Natural gas price ended the month at $8.66, up 5.0 percent from July.

The prediction for August 1st is 8.66. The maximum price is $9.54, while the lowest price is $8.64. For the month, the average price was $8.98. Natural gas prices ended the month at $9.09, up 5.0 percent from August.

9.09 is the forecast for the beginning of September. The maximum price is $9.09, while the lowest price is $8.21. For the month, the average price was $8.76. Natural gas price ended the month at $8.64, a -5.0 percent decrease from September.

The prediction for October 1st is 8.64. The maximum price is $8.91, while the lowest price is $8.07. For the month, the average price was $8.53. Natural gas price ended the month at $8.49, down 1.7 percent from October.

The prediction for November 1st is 8.49. The maximum price is $9.36, while the lowest price is $8.46. For the month, the average price was $8.81. Natural gas price ended the month at $8.91, up 4.9 percent from November.

The prediction for December 1st is 8.91. The maximum price is $8.91, while the lowest price is $8.04. For the month, the average price was $8.58. Natural gas price ended the month at $8.46, down 5.1 percent from December.

The prediction for January 1st is 8.46. The maximum price is $8.46, while the lowest price is $7.64. For the month, the average price was $8.15. Natural gas prices ended the month at $8.04, a -5.0 percent decrease from January.

The prediction for February 1st is 8.04. The maximum price is $8.86, while the lowest price is $8.02. For the month, the average price was $8.34. Natural gas price ended the month at $8.44, up 5.0 percent from February.

The prediction for the first week of March is 8.44. The maximum price is $8.65, while the lowest price is $7.83. For the month, the average price was $8.29. Natural gas price ended the month at $8.24, down 2.4 percent from March.

The prediction for the first week of April is 8.24. The maximum price is $9.08, while the lowest price is $8.22. For the month, the average price was $8.55. Natural gas price ended the month at $8.65, up 5.0 percent from April.

The prediction for the first week of May is 8.65. The maximum price is $9.53, while the lowest price is $8.63. For the month, the average price was $8.97. Natural gas prices ended the month at $9.08, up 5.0 percent from May.

The forecast for the first week of June is 9.08. The maximum price is $9.10, while the lowest price is $8.24. For the month, the average price was $8.77. Natural gas price ended the month at $8.67, down 4.5 percent from June.