Overview

The United States overtook Russia as the world’s largest producer of gas in 2009 thanks to the shale gas explosion. Hydraulic fracturing and horizontal drilling have opened up a gas resource that will serve the US for 100 years at current rates of consumption, according to official estimates, and altered the net energy balance.

US proven gas reserves increased by 12% year-on-year in 2010, to 317 trillion cubic feet (8.97 trillion cubic metres), with shale gas behind the gains and making up for losses in other types of gas reserves. Shale’s share of total proven US gas reserves has grown very significantly from less than 10% in 2007 to over 30% in 2010.

The environment for gas consumption has been weak because of a still ailing economy and warm seasonal temperatures, but interest from power generators to take advantage of the gas prices has hiked up overall consumption.

Gas prices have fallen amid plentiful supplies and weak demand factors. Henry Hub has averaged $2.58 per million Btu (MMBtu) in 2012 compared to $4.00/MMBtu in 2011. Demand is strengthening, though, as combined cycle power plants are being built and LNG export plans are progressing, notably at Cheniere’s Sabine Pass.

The US still imports gas, principally from Canada via pipeline, though these imports have been affected by the low price environment in the US. 

As a result of prolific domestic gas supplies, LNG imports fell by 2.2 billion cubic metres in 2011 compared to 2010 (according to the 2012 BP Statistical Review of World Energy), amounting to 10 bcm, and pipeline imports fell by 5.2 bcm, to 88.1 bcm.

Several of the 11 US LNG import terminals have requested to export US-produced gas as LNG since terminals have been under-utilised following the boom in production from unconventional resources.

Profile first uploaded: 18/10/2012