The boom in U.S. unconventional natural gas production, particularly growth from the Appalachian Basin, has led to significant savings for residential, commercial and industrial end-users across the country, according to a study commissioned by two Ohio-based industry groups.
The analysis, conducted by Cleveland-based Kleinhenz & Associates for the Ohio Oil and Gas Energy Education Program and Shale Crescent USA, said record gas production has saved households, businesses, manufacturers and power generators across the country $1.1 trillion since 2008.
While natural gas production hit record levels over the last decade, the report noted that much of that growth has occurred in Ohio, Pennsylvania and West Virginia, where the Marcellus and Utica shales have driven volumes. Between 2008 and 2018, production increased by 26.5 Bcf/d across the three states, accounting for the bulk of the 31 Bcf/d increase across the country during that time. Average annual Henry Hub prices fell from $8.86/MMBtu in 2008 to $3.08/MMBtu last year, the report said.
Commercial, industrial, residential and power generators in Ohio, Pennsylvania and West Virginia have saved $90 billion since 2009, according to the report. The region’s industrial users alone have saved $25 billion in energy costs.
Across the country, the report found that growth in domestic natural gas production resulted in more than $4,000 in savings per household over the 10-year period analyzed for those using natural gas. Analyzed by region, a breakdown of costs showed households in cooler regions of the country realized more savings than warmer regions.
U.S. dry gas production hit record levels of more than 80 Bcf/d last year, and volumes are expected to continue growing this year. Associated gas from the Permian Basin has helped drive more growth in recent years. Appalachian gas production is also expected to continue increasing, albeit at a slower pace, than in years past as the pipeline buildout slows and operators face more pressure from investors to curb spending.
Shale Crescent formed in 2016 to promote natural gas resources in the Mid-Ohio Valley, a region near the Ohio River that includes parts of Ohio, West Virginia and Pennsylvania. The group released a study earlier this year by IHS Markit that found the basin would account for 45% of the nation’s gas supply by 2040.
According to the Energy Information Administration, unconventional Appalachian gas production is now about 33 Bcf/d. The agency projects that total U.S. dry gas production will average 91.6 Bcf/d this year.