A supply bottleneck that began last year, owing to a halt in drilling during the epidemic, has pushed prices to all-time highs. Much of Europe and Asia, unlike the United States, lacks major domestic natural gas supplies.
Why has the price of natural gas dropped?
According to the International Energy Agency’s latest quarterly assessment, global natural gas demand is expected to fall somewhat in 2022 as a result of rising costs and market disruptions induced by Russia’s invasion of Ukraine.
Spot gas prices have surged to new highs as Europe’s desire for a more diverse natural gas supply has boosted demand for LNG cargoes, with some being diverted away from Asia. During the 2021-22 heating season, average spot LNG prices in Asia were more than four times the five-year norm. Despite a mild winter, spot LNG prices in Europe were five times their five-year average. Prices were also raised by Russia’s measures to severely curtail short-term gas deliveries to Europe, which had left European storage levels 17 percent below their five-year average at the start of the European heating season, even before its invasion of Ukraine.
Russia is Europe’s top natural gas provider, with Russia fulfilling 33% of the region’s demand in 2021, up from 25% in 2009. Despite supply problems and damage to Ukraine’s gas infrastructure, natural gas flows across Ukraine have persisted since the invasion.
In Europe, natural gas consumption is predicted to drop by over 6% this year. Asia is anticipated to rise by 3% in 2022, a significant deceleration from the 7% growth seen in 2021. Because they rely mostly on domestic gas production, regions such as the Americas, Africa, and the Middle East are projected to be less directly affected by gas market volatility. They are, however, affected by the broader economic consequences of Russia’s invasion of Ukraine, such as rising commodity prices, weakened purchasing power, and reduced investment due to shattered business confidence.
How long till natural gas is no longer available?
It’s impossible to say for sure, but based on current global usage and known natural gas reserves, the world is expected to run out of natural gas in around 50 years. This could change if new reserves are discovered or if there is a major global push toward clean renewable energy, but the writing is on the wall. Fossil fuels are a finite resource, and since the easy stocks of oil, gas, and coal have mostly been depleted, we are left with the costly and environmentally destructive extraction methods to continue on this path of certain catastrophe.
Due to depleting reserves, we’ve had to resort to fracking, mountaintop removal for coal extraction, and offshore drilling or oil sand extraction for oil. We’ve picked all of the low-hanging fruit, and what’s left is becoming more expensive and inflicting more extraction harm.
Are we on the verge of running out of natural gas?
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.
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?
- How much does it cost to produce electricity using various power plants?
- 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 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?
- In the Weekly Natural Gas Storage Report, how does EIA determine the year-ago and five-year averages?
- Does the EIA provide state-by-state estimates or projections for energy output, consumption, and prices?
- Why am I paying more for heating oil or propane than what is listed on the EIA website?
- Is the EIA aware of any unplanned disruptions or shutdowns of energy infrastructure in the United States?
Are Natural Gas Prices Set to Rise in 2023?
According to our newest Short-Term Energy Outlook, we expect marketed natural gas production in the United States to climb to an average of 104.4 billion cubic feet per day (Bcf/d) in 2022 and then to a record-high 106.6 Bcf/d in 2023. (STEO). Over the next two years, the Lower 48 states (L48), excluding the Federal Offshore Gulf of Mexico, will account for almost 97 percent of output (GOM). The remaining 3% will come from Alaska and the Gulf of Mexico.
The wholesale spot price of natural gas at the U.S. benchmark Henry Hub will average $3.92 per million British thermal units (MMBtu) in 2022, an eight-year high, and $3.60/MMBtu throughout 2023, according to our estimates. We foresee ongoing increases in drilling activity and natural gas production in the United States as a result of these high prices.
Legacy production in the L48 is expected to average 83.2 Bcf/d in 2022 and reduce 21% to 65.9 Bcf/d in 2023, according to our prediction. In 2022, new well production will add 18.1 Bcf/d, rising to 37.8 Bcf/d in 2023, balancing declining legacy well production and increasing total L48 marketed gas production to 103.7 Bcf/d in 2023.
The Appalachia region in the Northeast, the Permian region in western Texas and southeastern New Mexico, and the Haynesville region in Texas and Louisiana will all contribute to increased natural gas production in the United States.
According to our STEO prediction, Haynesville output will increase by 1.6 Bcf/d yearly on average during the next two years. Drilling in the Haynesville region remains cost-effective, even with deeper and more expensive well development, as long as natural gas prices remain high. Haynesville also attracts operators due to its higher well productivity and closeness to liquefied natural gas export ports and significant industrial natural gas customers along the US Gulf Coast.
The Permian region is expected to add 2.2 Bcf/d to production increase in 2022 and 1.2 Bcf/d in 2023, according to our estimates. Our projection for the West Texas Intermediate crude oil price stays over $60 per barrel, prompting operators to ramp up oil-directed drilling in the region, resulting in increased associated gas output.
In recent years, the Appalachia region has contributed the most to domestic natural gas production in the United States, contributing about one-third of L48 output annually since 2016. Despite the fact that production growth has slowed in recent years due to reduced drilling activity and emerging pipeline capacity constraints, Appalachia well-level productivity has increased, partially offsetting the drilling reduction. Production in the Appalachia region is expected to increase by 0.3 Bcf/d in 2022 and 0.7 Bcf/d in 2023, according to our estimates.
Is there any natural gas left?
The world’s proven reserves are equal to 52.3 times yearly consumption. This indicates there’s around 52 years of gas left in the tank (at current consumption levels and excluding unproven reserves).
What will take its place in the absence of natural gas?
New Zealand’s goal is to reach zero net carbon emissions by 2050 and reduce methane emissions by 24 to 47 percent, according to the Climate Change Response (Zero Carbon) Amendment Act, which was passed in 2019. The bill establishes a framework to support the worldwide effort under the Paris Agreement to keep global average temperature rise to 1.5 degrees Celsius over pre-industrial levels.
Methane, commonly known as natural gas, and bottled liquefied petroleum gas (LPG) are being used in New Zealand to heat homes and businesses and generate energy. Natural gas is transported to users on the North Island via a network of pipes. This infrastructure does not exist on the South Island.
Firstgas Group outlined its roadmap for decarbonizing New Zealand’s natural gas network and transitioning away from carbon-emitting gases on Monday, a strategy that will help the country achieve its net-zero goal.
Hydrogen will be mixed into the North Island’s natural gas network starting in 2030, with the goal of converting to a 100 percent hydrogen grid by 2050, according to Firstgas Group.
Natural gas, or methane, is a dirty alternative to hydrogen, the most plentiful chemical element. Natural gas, nuclear power, biogas, and renewable energy sources like sun and wind can all be used to make hydrogen.
Biogas can be made from agricultural waste, manure, municipal waste, plant material, sewage, or food waste, whereas bioLPG is propane made from renewable feedstocks like plant and vegetable waste material, which has the potential to reduce carbon emissions by up to 80%.
The Firstgas Hydrogen Network Trial report, which was also released on Monday, informs the changeover schedule. The paper, which was funded by the Provincial Develop Unit, forecasts future hydrogen supply and demand in New Zealand and evaluates technological feasibility and regulatory considerations.
Firstgas Group stated on Monday that its networks can deliver enough hydrogen to decarbonize the natural gas network by 2050.
It claims that hydrogen mixes of up to 20% cut carbon emissions from natural gas consumers while requiring no changes to existing equipment. From 2030, the blends might be gradually spread across the country.
Beginning in 2035, networks will be converted to 100% hydrogen gas. This gives time for appliances to be replaced with pure hydrogen-powered technology. Firstgas estimates that the gas network will be completely converted to hydrogen by 2050.
Hydrogen is predicted to largely replace fossil fuels in emissions where electrification the transfer to electrical power is not possible, making reductions more difficult.
The strategy attempts to satisfy the Zero Carbon Act’s goals without requiring gas customers to use electrification or carbon offsets or to replace their current gas equipment.
When needed to meet demand during peak hours or dry spells, stored green hydrogen will be converted back to electricity.
Hydrogen Project Leader Angela Ogier told The AM Show on Monday morning, following the news, that the strategy will ensure that the benefits of gas can continue in a zero-carbon future.
“It’s a means for us to keep utilizing our barbecues, lengthy, hot showers with our hot water heaters, and gas stoves in the future of net-zero,” she explained.
At this time, the majority of hydrogen is made from fossil fuels. However, it is believed that in the future, the clean alternative can be made using electricity and water in a process known as electrolysis.
“It’s more expensive right now,” Ogier told The AM Show. “This type of technology is becoming more affordable. By 2030, we expect the cost to have been cut in half.”
Green hydrogen, produced from excess renewable electricity, will be used to replace fossil fuels where practicable, according to the Firstgas Hydrogen Network Trial report. According to Firstgas, the hydrogen will be created by regionally distributed electrolysers and distributed through existing local pipe networks that transport natural gas to customers.
According to Ogier, the hydrogen is expected to be transported to New Zealand houses via existing gas pipelines.
“We’ll have a lot of work ahead of us,” she predicted. “We’ve looked into the viability of changing the pipes would we have the capacity in our pipelines to deliver the hydrogen we need in a hydrogen world? And what must we do to ensure that it is truly safe? We need to go over everything and double-check everything.”
Firstgas Group CEO Paul Goodeve acknowledged in a statement on Monday that many Kiwis have been affected “Some suggestions for the future of gas in New Zealand have left him “unsettled.”
“In a cleaner future with zero carbon gas, the benefits of gas are here to stay,” Goodeve stated.
The strategy, along with its schedule, lays out everything you need to know “He promised “absolute security” to gas users and the country.
“This is a feasible path to zero carbon emissions that requires no action from customers for the next 15 to 20 years.
“Gas users have the assurance that they will be able to keep using their existing equipment while reducing emissions, and the nation has the assurance of a stable transition to zero-carbon gas by 2050.”
“New Zealand will have a zero-carbon electricity network and energy from a clean and reliable gas that provides the same benefits that natural gas and LPG customers have come to expect by 2050, according to Goodeve.
“At the time of usage, hydrogen emits no pollution. It takes the role of fossil fuels that electricity isn’t well equipped to replace, such as heavy transportation and process heat in manufacturing.”
During dry years and high demand periods, hydrogen can also replace coal and gas in the production of power, resulting in a 25% reduction in total emissions from the energy industry.
Why is there a shortage of gas?
When tens of millions of Americans get behind the wheel this holiday weekend, they’ll discover the highest fuel prices in nearly seven years. However, many people will come upon gas stations that are completely devoid of gas.
The nationwide average price for a gallon of normal gasoline is $3.10, up from $3.10 in October 2014. The average has risen just 2% since Memorial Day, but is up 42% from a year ago, when pandemic limitations slowed demand and sent oil and gas prices plummeting.
However, the lack of gas stations has nothing to do with the price or even quantity of gasoline. Supply chain bottlenecks and shortages are being caused by a shortage of tank truck drivers combined with increased demand. According to experts, an increasing number of stations are claiming that they are unable to obtain gas delivered at any price.
According to Tom Kloza, worldwide head of energy analysis at the Oil Price Information Service, which tracks prices for AAA, the outages are currently distributed across the country. Outages have been recorded throughout the Pacific Northwest, Northern California, Colorado, and Iowa, according to him. According to Patrick DeHaan, a spokesperson for GasBuddy, disruptions have also been recorded in Indianapolis and Columbus, Ohio.
“Truck deliveries used to be a last-minute consideration for station owners. “Right now, it’s job No. 1,” Kloza explained. “What concerns me for July is that the increased demand would necessitate an additional 2,500 to 3,000 deliveries per day. There aren’t enough drivers to do it.”
According to the US Energy Information Administration, current gasoline demand in the United States is almost unchanged from the same period last year. However, overall demand is up 16% from the end of last year, when there were this many people on the road during the holidays.
This Fourth of July weekend, AAA predicts 43.6 million Americans will travel by car, the most so far this year. Given the pent-up demand for summer vacations, Kloza believes gas demand could surpass the previous highs set in late summer of 2019.
He’s also worried that if vehicles see a gas station that’s out of gas, they’ll fill up their tanks more frequently than necessary, contributing to a gasoline shortage. That’s what happened in May, when the Colonial Pipeline was hacked, resulting in severe outages at stations across the East Coast.
“This is not the time to fill up every car you have and every container you have,” Jeff Lenard, vice president of strategic industry initiatives for the National Association of Convenience Stores, said. “We despise shortages and outages caused by panicked vehicles filling up their tanks.”
In 2021, how much gas will be left in the world?
Based on current natural gas production rates and known natural gas reserves, we have approximately 52.8 years of natural gas reserves remaining.
How long will there be enough oil?
The world’s proven reserves are equal to 46.6 times its yearly consumption. This means it will run out of oil in around 47 years (at current consumption levels and excluding unproven reserves).
What is the source of natural gas in the United States?
By 2021, Canada would account for nearly all of the United States’ total annual natural gas imports, with pipelines accounting for nearly all of them. CNG was imported by truck in limited quantities from Canada, accounting for less than 1% of total natural gas imports. LNG accounted for only 1% of total US natural gas imports, with Trinidad and Tobago accounting for 99 percent. Imports of natural gas into the United States are typically at their greatest in the winter, when imports help meet increased natural gas demand for heating.