American Oil and Gas Reporter - March 2016 - 43

Three Key Market Sectors
Driving New Demand Loads
For Domestic Natural Gas
By Karen Buchwald Wright

MOUNT VERNON, OH.-While tight-sand oil plays have been the catalyst for U.S. activity
in recent years, it is worth remembering that the American shale (unconventional) revolution
began in natural gas shales. With the world's attention fixated on oil markets, could natural
gas emerge as the key to the industry's recovery?
That may be hard to determine at the moment, with prices mired in the $2 an MMBtu
range on the New York Mercantile Exchange, and gas rig counts at historic lows. However,
change is a constant in the cyclical world of natural gas, and the bottom of the cycle invariably
gives way to a new upswing. Already, demand-side drivers are in place that have the potential
to move the needle quite meaningfully on natural gas consumption.
The good news for consumers is that there is no longer any question about the surety of
supply. The development of unconventional resources has resulted in record gas production.
Data from the U.S. Energy Information Administration show that marketed production
reached 27.3 trillion cubic feet in 2014-the highest annual total on the books-up from 19.5
Tcf in 2004 and 21.6 Tcf in 2009. It is easy to see what is behind the upsurge: Gross
withdrawals from shale wells jumped by nearly 10 Tcf between 2009 and 2014, according to
the EIA.
Demand is expanding also, with annual U.S. consumption climbing 5 Tcf since 2006, hitting
26.7 Tcf in 2014 (73 billion cubic feet a day). The EIA estimates usage ticked upward by 2.5
Bcf/d, to 27.6 Tcf, in 2015 and projects another 1.1 Bcf/d gain to 28.0 Tcf this year.
However, the incremental growth in demand has not occurred at a sufficient pace to match
the supply growth in shale plays, creating an imbalance. But the market is responding to more
fully leverage North America's bounty of clean-burning natural gas.

MARCH 2016 43



American Oil and Gas Reporter - March 2016

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