Rush for natural gas in US drives up output
By Sheila McNulty in Houston
Published: July 24 2008 03:00 | Last updated: July 24 2008 03:00
ft.com
Natural gas production in the US grew faster than anywhere else in the world last year as a rush of companies eager to capitalise on rising prices moved quickly to adopt new techniques for tapping resources once believed to be off-limits.
A report by PFC Energy, a consultancy, said natural gas production in the US grew by "an astonishing 4.3 per cent" last year, following a 2.3 per cent increase in 2006. Production data to the end of April this year show a growth rate of more than 10 per cent compared with the same period in 2007.
"This growth can continue," said Bob MacKnight, a PFC lead analyst. "The resource is there and the price is high enough so that the various technologies are commercial."
Only a few years ago the industry believed that US natural gas production had peaked. But new technologies have opened up access to more resources from unconventional sources, such as shale gas, tight sands and coal-bed methane.
"Until recently, many of these unconventional sour-ces were either uneconomic or marginally economic," Mr MacKnight said. "Fuelled by an almost 100 per cent gas price increase, between 2003 and 2006 the US onshore drilling rig count almost doubled as the industry applied brute force to extract as much gas as it could."
As fears have grown about peak supplies, the world's large oil and gas companies have scrambled to develop technologies to gain access to resources once considered unreachable - such as in the deep-water Gulf of Mexico - or too expensive to pursue.
Typically, the development of new technologies has taken a long time. But in onshore US production, this has happened quickly over the past five years.
"Driving the speed of implementation of these new technologies is the large number of operators and service companies active in these unconventional gas basins, causing any successful new drilling or completion technology to be quickly adopted by most companies active within the play," said Mr MacKnight.
Devon Energy, which has been a leader in extracting natural gas from shale rock - one of the fastest growing of the unconventional sources - has extensive natural gas production in the Barnett Shale of north Texas, widely considered the best gas field in the US.
"An increasing volume of our natural gas is going to come from North America's rich shale and tight gas sands reserves," said John Richels, president of Devon Energy. "The progress we have made in producing gas from shale over the past decade is encouraging as we inventory the energy sources we will have available to our economy in the years ahead."
This good news for US natural gas production is bad news for developers of liquefied natural gas terminals, which invested billions of dollars in facilities to import natural gas a few years ago.
Copyright The Financial Times Limited 2008 |
