The promise of remarkably abundant natural gas in the US appears to be as real as the industry has claimed, with the latest estimates from the country’s scientific body charged with evaluating recoverable gas reserves issuing a blockbuster upgrade.
The new recoverable reserves number is the highest in the 48 years the Potential Gas Committee, a nonprofit organization of sector experts hosted by the Colorado School of Mines, has been issuing its evaluations. The last record number was issued in 2010 as the full scale of the impact of hydraulic fracturing technology was just making itself felt across the entire economy, and the Committee’s perceived uncertainty about how accessible reserves would actually be following the issuance of that record number caused consternation that industry had been overselling the potential of the fuel.
Reserves and supply of any geologically trapped fuel are bound to be uncertain, based on a variety of factors from new mapping to permitting practices and economics. The Committee’s simplest number, its headline Future Gas Supply estimate, rose 22.1% from 2010 to hit 2,688 trillion cubic feet of natural gas in the new report, up from 2,202 trillion cubic feet of forecast supply in 2010.
To understand the scale of that resource, the Energy Information Administration has forecast that US natural gas consumption will edge slightly above 70 billion cubic feet in 2013 and 2014. That is despite soaring use of natural gas as prices have stuck at low levels following the fracking boom.
The US natural gas industry’s responded to the estimate revision with enthusiasm, noting that the Potential Gas Committee appeared to have accepted industry arguments about the degree to which technology can boost supply. “The Potential Gas Committee clearly recognizes new and advanced technologies can produce more natural gas in American shale regions and it has become increasingly sophisticated in assessing the size of this resource,” America’s Natural Gas Alliance Chief Economist Erica Bowman said in a statement following the report’s release.
Prognostication about the extent to which US natural gas supply could not only provide long-term energy savings for the economy but also impact everything from manufacturing employment and net exports to global geopolitics now looks distinctly less overblown. While the Committee noted that its estimates are just that, their numbers are also generally held to be the most reliable in the sector.
Amid fights over exports of natural gas and whether the fuel is sufficiently abundant that there will be available supply for both supply to foreign buyers as well sufficient availability to keep prices low for domestic customers, the report also appears to burnish the business case for exports. The details of development – timing, permitting, financing and competition from other sources of gas – remain potential spoilers for proposed export projects even if the most ambitious estimates are justified.