U.S. natural gas production will increase by 10 percent this year alone and by as much as 60 percent by 2037, a new report from IHS Markit has forecast. The market research company is extremely upbeat about U.S. gas because of the shale gas revolution, seeing the country becoming a leading LNG exporter thanks to this revolution as well.
Besides production, IHS analysts also raised their estimates of gas supply in the United States that is economical at prices below the US$4 per MMBtu Henry Hub benchmark price—from 900 trillion cubic feet in 2010 to 1,250 trillion cubic feet. Thanks to this consistent cost decline, IHS expects natural gas to come to account for almost half of power generation in the country by 2040, from about 42 percent today.
To date, the U.S. produces around 81 billion cubic feet of natural gas daily. That’s up from 50 billion cubic feet before the shale boom, but if IHS estimates are correct, the daily average will expand to 118 billion cubic feet by 2037.
That’s good news for the power generation sector where coal and nuclear plants are being retired at a faster pace now that there is so much cheap gas around. Moody’s earlier this month estimated that growing gas production will make it possible to offset the loss of 35 GW of power generation capacity from plant retirements over the next five years. Sure, some renewable installation additions will help, too, but gas-fired plants will be the dominant alternative to coal and nuclear.
Since the United States cannot consume all this gas, a lot more of it will go to international markets, with IHS expecting the daily average LNG export rate in five years at a minimum of 10 billion cubic feet natural gas equivalent. That’s up from an estimated 3 billion cubic feet this year and 1.9 billion cubic feet last year.
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