Since the dawn of the shale revolution, periodic estimates of technically recoverable U.S. natural gas resources have trended upward. Until now.
That is a key takeaway from the latest installment of the “Future Supply of Natural Gas in the United States,” an authoritative assessment issued biennially by the Potential Gas Committee (PGC). Last week, the PGC reported its latest technically recoverable gas resource estimate: 3,368 Tcf at year-end 2020.
In contrast, PGC reported a 6-Tcf (0.2%) higher technically recoverable gas resources estimate for year-end 2018. The 3,368 Tcf figure breaks a string of seven consecutive biennial increases for the technically recoverable statistic, PGC Executive Director Alexei V. Milkov said Wednesday. Milkov is a professor at the Colorado School of Mines.
“It’s a small decrease, but it’s an important decrease,” Milkov said during an online briefing sponsored by LNG Allies, the American Petroleum Institute and the American Exploration and Production Council.
Milkov attributed the decrease to two pandemic-related factors: a relatively low level of activity by oil and gas companies and a significant drop in oil and gas prices.
Only Part Of The Story
To be sure, the drop in the technically recoverable estimate only reflects part of the U.S. gas supply outlook. When combining the technically recoverable resources with recovered gas reserves, the PGC arrived at a total estimated U.S. gas resource base of 3,863 Tcf — a 25 Tcf gain from 2018 and a new record.
LNG Allies CEO Fred Hutchison called the PGC report “a good news story” amid a largely challenging global energy backdrop. He said it confirms that the United States boasts a 100-plus-year natural gas supply base for the domestic and export markets. Moreover, he said there is “every reason to expect” that U.S. natural gas prices will remain far below prices in Europe and Asia.
Milkov echoed Hutchison’s point regarding domestic supply.
“Although there is a minor decrease in total gas resources, the PGC confirms that the U.S. has an abundance of natural gas,” he said. “These resources are present in various reservoirs both onshore and offshore.”
Valuescope Inc.’s Tom McNulty, Energy Practice Leader in Houston, told NGI the latest PGC assessment underscores the United States’ status as the world’s top natural gas player.
“Natural gas is critical for the energy transition because right now it is not possible to safely move to renewables by themselves and keep modern grids energized,” McNulty said. He also highlighted the precarious situations various regions face as winter approaches.
“Europe is heading into a tough winter and will likely have to burn coal and fuel oil to keep people from freezing,” McNulty said. “They shut down too many gas and nuclear plants far too quickly. Here, California is quietly trying to get some gas plants back online; they had been ordered closed. Asia continues to build out vast numbers of coal-fired power generation because of a lack of natural gas supplies that the region can count on.”
McNulty, who predicts U.S. oil and gas producers will raise output in the coming month, also views recent strides on the “green” front as positives for gas.
“And the substantial developments that we have seen recently in terms of certified green gas and renewable natural gas here in the U.S. serves to drive this point home,” he said. “Natural gas is the most essential energy source today that we have to rationally move the energy transition forward without causing problems. Nuclear power can be a solution as well, obviously, but continues to be shunned in many regions.”
The all-volunteer PGC began issuing period estimates of the U.S. natural gas endowment in 1964.
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