US Energy Groups Act On Natural Gas Demand

on September 19, 2011 at 6:00 AM

US energy companies are converting rigs and trucks to run on natural gas, building fuelling stations and launching educational campaigns to increase demand for the domestic fuel that has flooded the market on the back of the shale boom.

With technological advances enabling gas production from shale rock, estimates of US supplies of natural gas have risen from 30 to 100 years’ worth, at current usage rates, with the US market now oversupplied.

Prices have been hovering at about $4 per million British thermal units, down sharply from 2008’s record of $13.69 per mBtu, and the industry believes they could remain at that level for several years.

To jump-start demand, Chesapeake Energy, the second-biggest natural gas producer in the US, is converting 100 of its own rigs, all its hydraulic fracturing equipment and almost 5,000 of its fleet vehicles to run on natural gas.

Taylor Shinn, Chesapeake’s senior director of corporate development, said the company was not going to stand by and wait for US demand to catch up with supply.

“This is not a technology problem,” Mr Shinn said. “We’re not waiting on an enhanced battery to make this product viable as a transportation fuel. What we’re waiting on is for economies of scale to develop.”