• 2 hours Midwestern Refiners Seek Canadian Oil To Expand Output
  • 7 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 11 hours LNG Glut To Continue Into 2020s, IEA Says
  • 13 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 16 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 18 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 19 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 4 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 4 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 4 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 5 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 5 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 5 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 5 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 7 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 7 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 7 days China To Take 5% Of Rosneft’s Output In New Deal
  • 7 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 7 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
Alt Text

The Natural Gas Market Is Set To Boom

With the new lower-for-longer oil…

Alt Text

Controversial Azeri Pipeline Receives $500M Funding

The European Bank of Reconstruction…

US & Russia Dominating The Natural Gas Sector

US & Russia Dominating The Natural Gas Sector

This is the 2nd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous post – World Sets New Oil Production and Consumption Records – delved into world oil production and consumption figures. Today’s post looks at the global natural gas picture.

In 2013 global natural gas production advanced 1.1% to a new all-time high of 328 billion cubic feet per day (Bcfd). Except for a one-year decline in 2008-2009, global gas production has risen fairly steadily for about three decades, and production has more than doubled during that time span:

Gas production 1970-2013

The US is Still Gas King

The US continues to dominate both natural gas production (and consumption). In 2013, the US set a new all-time high production record for the third straight year, with gas production rising to 66.5 Bcfd to lead all countries. In fact this was once again more natural gas than any country has ever produced in one year.

Related Article: As Fracking Expands, So Does Opposition – Even In Texas

US natural gas production 1970-2013

Natural gas production in Russia reached 58.5 Bcfd, good for 2nd place globally. The US and Russia cumulatively produce 38% of the world’s natural gas. Far behind in third place was Iran at 16.1 Bcfd — good for 4.9% of global gas supplies. Rounding out the top five were Qatar at 15.3 Bcfd and Canada at 15 Bcfd.

However, US natural gas consumption was still greater than consumption, rising to 71.3 Bcfd as utilities continued to look to natural gas as a cleaner alternative to coal. Despite an increase in the past 8 years of 17 Bcfd — an increase of nearly 35% — the US remains a net importer (and the largest consumer) of natural gas.

Russia and Iran were second and third in natural gas consumption. They consumed, respectively, 40 Bcfd, and 15.7 Bcfd. The US and Iran consumed at least as much gas as they produced, while Russia produced nearly 50% more than it consumed internally. The rest of Russia’s gas is piped primarily to Europe, but China recently signed a $400 billion deal with Gazprom that will supply China with Russian gas for the next 30 years. In 2013 China was the world’s fourth-largest consumer of natural gas at 15.6 Bcfd. Rounding out the top five among consumers was Japan at 11.3 Bcfd.

Natural Gas Reserves

Despite the surge in US natural gas production, US proved reserves have increased substantially over the years. Proved gas reserves in the US reached an all-time high of 334 Tcf in 2011, fell in 2012, but surged in 2013 back to 330 Tcf. The increase in reserves is primarily a function of the pairing of hydraulic fracturing with horizontal drilling, which turned a big volume of natural gas resources into natural gas reserves for the first time (i.e., the “shale gas boom”). After two decades of declining to flat natural gas reserves, US reserves have now risen 86% since 2000.

Global proved natural gas reserves have grown more consistently than US reserves over the years, albeit not as sharply. Over the past decade global gas reserves are up 33%, and just eked out a new record in 2013 of 6,558 Tcf. While this record is a fraction of a percent higher than the previous record in 2011, global reserves have been effectively flat for the last two years.

Related Article: Wishful Thinking About Natural Gas

Price and Differentials

The surge in US gas production has had a dampening impact on domestic gas prices, but internationally prices have risen substantially over the past decade:

 Global natural production 1970-2013

This combination has resulted in enormous differentials that have developed between US natural gas prices and liquefied natural gas (LNG) prices in Europe and northeast Asia. These high differentials have resulted in a rush to build LNG export terminals in the US.

US natural gas production is up 11.4 Bcfd in just the past five years. However, there are presently 13 pending proposals awaiting approval from the Federal Energy Regulatory Commission (FERC), with a total proposed export capacity of 17.9 Bcfd. Two projects have already been approved by FERC. Cheniere Energy (NYSE: LNG) and Sempra Energy (NYSE: SRE) have had projects approved with a combined proposed capacity of 4.46 Bcfd.

Conclusions

The global natural gas picture is dominated by the US and Russia, and this will likely continue to be the case for the foreseeable future. But the US is in 5th place globally in natural gas reserves, far behind countries like Iran and Russia. Ultimately the US will probably yield its position as the top gas producer back to Russia.

Nevertheless, the shale gas boom in the US has expanded natural gas production rapidly, which has led to a number of LNG export terminal proposals. But unless US natural gas production continues expanding at the pace of the past five years, it is almost a certainty that these export facilities (among other drivers) will lead to higher US natural gas prices.

By Robert Rapier of EnergyTrends Insider




Back to homepage


Leave a comment
  • Ronald Wagner on July 29 2014 said:
    We have barely begun to exploit our potential natural gas resources. We are flaring substantial amounts. Government lands have barely been touched. Offshore resources outside of the Gulf have barely been touched. Methane hydrates have not been touched. Our mistake is in not more rapidly using our resources to provide jobs and exports.

    See Useful References: https://docs.google.com/document/d/19Yf0MWpo91vrlu-mmJtjB1ERukjJo5W41oi4RZVQBug/edit

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News