Reports of robust supplies and low prices have attracted a lot of homeowners and businesses to natural gas, but supplies are about to get tight and drive prices higher, according to a recent article by petroleum geologist Arthur E. Berman on OilPrice.com.
Berman cited numerous information sources in his in-depth report and concluded that natural gas faces a supply deficit by the end of this year. “Production is decreasing, while consumption and exports are both increasing,” he wrote.
Gas production companies “will drill more wells if investors continue to provide capital. This, however, will probably be too little too late to stop the decline in gas production that is already underway,” the article states. “Conventional gas has been in terminal decline since 2008, and shale gas production growth has maintained and increased U.S. supply. Now that shale gas production is also in decline it is unlikely that production will increase much without higher prices.”
“Shale gas plays were supposed to provide 100 years of supply but there never was 100 years of gas,” Berman wrote. “It was a story told to promote the erroneous idea that the U.S. had so much gas that it could afford to squander and export this valuable natural resource.”
While supplies are becoming constricted, the natural gas industry has succeeded in growing demand, with considerable help from federal agencies, according to Berman. “EPA air pollution regulations since 2011 have led to the closing of dozens of coal-fired power plants in favor of increased dependency on natural gas for electric power thus increasing demand,” the article states. “The U.S. Department of Energy has granted almost blanket approval to applications for LNG (liquefied natural gas) and pipeline export in recent years, also increasing demand.”
To read the OilPrice.com article, click here.
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