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John Hennessy III,

The Promise of Natural Gas

Posted by Content Coordinator on Thursday, October 18th, 2012


America has seen a fundamental shift in the natural gas marketplace. Technological advances, a newly accessible and abundant domestic resource, and an extensive delivery infrastructure make natural gas the foundation fuel for our economy. Production of natural gas from shale and other unconventional resources has added greatly to North American supplies in recent years. This abundance of home-grown natural gas provides an opportunity to satisfy significant new demand at affordable prices well into the future. Our nation’s bullish natural gas supply outlook offers an incredible opportunity to deliver energy value to American homes and businesses, fuel a renaissance in U.S. manufacturing, and provide a cleaner, less expensive option for vehicles, thus reducing our dependence on imported oil.

Domestic Abundance

Advances in American technology have opened the door to efficient, affordable, and responsible extraction of natural gas in North America. Natural gas production from unconventional sources, such as shale, has grown considerably in recent years. It accounted for a third of domestic gas produced in 2012. Proven reserves and yet to be developed resources are enormous, giving credence to expectations that natural gas can meet and sustain a significant share of our future domestic energy needs.

Further technological developments will help improve resource extraction efficiency, mitigate environmental and community impacts of natural gas production, and continue to increase the efficiency of natural gas use in homes, businesses and communities across the country.

Natural gas utilities believe that this North American energy endowment can be developed in a responsible and sustainable manner so that the full benefits of this clean energy source can be realized for all Americans.

A Future of Market Stability

Fully understanding the future of natural gas as an energy solution in the United States means taking an inventory of today’s market fundamentals, infrastructure assets and burgeoning supply potential and projecting these elements forward to understand how natural gas will contribute to our future. The natural gas market today is characterized by robust supply and significant potential for expanding its use in homes, businesses, power generation, industrial plants, and vehicles as well as the export of liquefied natural gas. Investments in these energy applications can provide benefits to our nation’s economy, environment and national security. Conversely, increases in demand also support the long term economic viability of domestic natural gas production.

There is room to grow natural gas demand at reasonable and relatively stable prices. Domestic natural gas demand growth during 2012-2022 is needed to establish price levels that sustain a production response from gas producers. Many of the identified shale gas resource plays and more traditional production models become economically available to the market at a projected development cost of $5 – 6 per MMBtu. This is precisely the foundation that accounts
for the possibility of an additional 11 to 34% increase in domestic natural gas production during the next ten years and is supported by many gas energy outlooks.

These strong natural gas supply fundamentals along with a robust and reliable natural gas delivery infrastructure suggest that over the next decade, a range of demand scenarios can be met by a diverse and responsive supply market within an estimated price band of $4.00 to $6.50 per MMBtu—a level well below the peak market prices of the preceding decade.

Even significant increases in demand can be supported by this large, dynamic, robust and diverse North American natural gas resource base. When coupled with expanding infrastructure and appropriate regulatory constructs, we envision relative natural gas market stability during the next ten years and possibly beyond.


Read full report (PDF) here: The Promise of Natural Gas

About the American Gas Association
“The American Gas Association, founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 71 million residential, commercial and industrial natural gas customers in the U.S., of which 92 percent — more than 65 million customers — receive their gas from AGA members. Today, natural gas meets almost one-fourth of the United States’ energy needs.”

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