A new IHS Markit report assesses the impacts of the first ten years of the U.S. unconventional gas revolution and looks ahead to its future potential. The report titled The Shale Gale Turns 10: A Powerful Wind at America’s Back says that the shale gas revolution, which already led to a “wholesale turnaround” in production – is only accelerating.
Natural gas production is expected to rise by almost 8 billion cbf per day (bcf/d), more than 10 percent, in 2018. According to a new IHS Market report, altogether, U.S. production is expected to grow by another 60 percent over the next 20 years.
The overall size of recoverable gas reserves continues to increase and the pace of production growth is only accelerating. Approximately 1,250 trillion cubic feet (tcf) of U.S. supply is economic below $4 per MMBtu Henry Hub price today, up from a previous estimate of 900 tcf in 2010.
IHS Markit expects U.S. LNG export capacity to more than double in the next five years and rise to at least 10 bcf/d by 2023. Ten years ago, the prevailing assumption was that the U.S. supply base was being exhausted and that the country would have to become a major importer of LNG. Today, the U.S. is now on track to become one of the world’s major LNG exporters.
Among the most dramatic effects has been on the U.S. electric power industry. Where coal and nuclear had previously dominated the growth in share of U.S. electric power generation, natural gas has become a “backbone of electric generation.” By 2040, IHS Markit expects natural gas share to grow from almost one-third to nearly half of all electricity generated in the U.S.
The revolution in unconventional gas (and a similar one for oil that followed it) have had far reaching impacts for the manufacturing sector and the U.S. economy as a whole. IHS Markit estimates that more than $120bn in new capital investments will be spent from 2012-2020 to expand U.S. petrochemical manufacturing capacity—a result of abundant and inexpensive natural gas and natural gas liquids providing advantages in terms of thermal energy, feedstock and electricity costs. Previous IHS Markit studies have found substantial benefits in terms of jobs, GDP, real net trade and disposable income.
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