World’s Largest Producer of Natural Gas? Now It's U.S.
by: Vinod Dar
January 13, 2010 | about: UNG / GAZ / APC / COP / PXD / CHK / MMR
For six years Russia was the world’s largest producer of natural gas. Now the USA has overtaken Russia to again become the world’s largest producer. The US is also the largest consumer of natural gas while Russia is the second largest. It is estimated( by industry and by the governments of the US and Russia) that over the past 12 months US production was about 22 trillion cubic feet (Tcf), an increase of 3.7% over the previous 12 months while Russian production was about 20.5Tcf, a decline of 12% as both Russian GDP and industrial output fell sharply.
The US natural gas industry has grown steadily and powerfully over the past 10 years in terms of expanding the resource base, the reserve base, production and logistical capacity and in actual production. The chief drivers have been technological and business process innovation, risk capital, the imagination and entrepreneurship of the independent E&P company, start ups, attractive business models, the substantial and continuing expansion of field and take away infrastructure, and very recently the substantial commitment of majors and mini-majors to the upstream natural gas industry.
Over the past 10 years proven US natural gas reserves have risen by nearly 50% and are now the highest in a generation, at about 250 Tcf (estimated as of mid 2009). The highest level reached was 293Tcf in 1967. This level is likely to be exceeded within 12 months, given the most recent pace of reserve additions. The US is embarked on multi-year period when annual net reserve additions could, on a sustained basis, be the greatest ever attained in the history of the US natural gas industry.
In just the past 3 years resource mapping and delineation has accelerated so much that US Government statistics are obsolete as soon as they are published and far lag reality. For example, as recently as Jan1, 2007 the US Government estimated that TOTAL gas resources (not reserves) from shale in the US were 267 Tcf. In December 2009, industry experts operating in the Marcellus play were estimating that the resource endowment of just that one shale basin was well in excess of 500Tcf. The author is of the view, based on industry reports, presentations, discussions and company specific conversations that the total US technically recoverable resource base is north of 2,000 Tcf (about a third greater than the published US Government estimate) and that, should current industry efforts to map and delineate the resource base continue, the total technically recoverable resource base will increase dramatically in the next 5 to 7 years.
Shale certainly captured the imagination of the industry and investors alike in 2009 and is the main reason for the recent growth in reserves and production. However, over the next 5 to 10 years, growth will be augmented by important contributions from other types of natural gas plays, even as several more shale basins becoming commercially notable.
These other plays are Coal-bed methane (CBM), tight sands (TS), ultra-deep water gas (both associated and non-associated) and shallow water, ultra deep (SWUD)....
etc.
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