A Natural Gas Glut?

January 27, 2011
U.S. Company, in Reversal, Wants to Export Natural Gas

Mr. Souki’s plan “can be made to work,” said Nikos Tsafos, a gas expert at PFC Energy, a consultancy firm. He warned, however, that as more companies began exporting American gas, it could pull the price of the commodity up in the United States and push it down in international markets.

Skeptics predict that the current gas glut in the United States will spread around the world as shale is drilled in Europe and Asia, major producers like Russia increase exports and more L.N.G. export terminals are built in the United States.

“For heaven’s sake, Israel just discovered 16 trillion feet of gas,” said Mr. Gheit. “Indonesia, Qatar, Algeria, Nigeria and now Israel can all sell cheaper than the U.S.”

Here's a chart of inflation adjusted natural gas prices from 1922 through 2009.



I have added its median inflation adjusted price over the period in red. I'm not suggesting that natural gas prices (adjusted for inflation) will return to the median, but there would seem to be ample room for more downside surprises. As one who heats his home with natural gas, you would not see me complaining.

November 9, 2010
Natural gas glut changes global energy forecast

Even rising global gas use, which will increase faster than any other fossil fuel, won't overcome a production surge that is emerging from shale gas resource development in the United States, and in Canada.

"The gas glut will be with us 10 more years," IEA chief economist Fatih Birol told Reuters.

International Energy Outlook 2010: Natural Gas

Although the extent of the world's tight gas, shale gas, and coalbed methane resource base has not yet been assessed fully, the IEO2010 Reference case projects a substantial increase in those supplies—especially in the United States, but also in Canada and China. In the United States, one of the keys to increasing natural gas production has been advances in horizontal drilling and hydraulic fracturing technologies, which have made it possible to develop the country's vast shale gas resources, and have helped to increase total U.S. natural gas resources by almost 50 percent over the past decade.

August 18, 2003
INTERVIEW WITH MATTHEW SIMMONS

Well, I know you understand it, but people need to understand the concept of peaking and irreversible decline. It’s a sharper issue with gas, which doesn’t follow a bell curve but tends to fall off a cliff.

There will always be oil and gas in the ground, even a million years from now. The question is, will you be a microbe to go down and eat the oil in small pockets at depths no one can afford or is able to drill to? Will you spend hundreds of thousands to drill a gas well that will run dry in a few months? All the big deposits have been found and exploited. There aren’t going to be any dramatic new discoveries and the discovery trends have made this abundantly clear.

Oops.

Update:


The red trend line shows the 12-month moving average.

Here's a chart that adjusts for population growth.



December 27, 2005
Hurricane Impacts on the U.S. Oil and Natural Gas Markets

Hurricanes Katrina and Rita damaged a number of natural gas processing facilities on the Gulf Coast.

Source Data:
EIA: Natural Gas Prices
EIA: U.S. Natural Gas Gross Withdrawals
BLS: CPI
St. Louis Fed: Population