Demand from power generation has accounted for 90-95 percent of all demand in the natural gas market during the past decade. However, the U.S. lost about a decade’s worth of demand in that sector during the recent recession.
“There’s been a big change fundamentally in overall energy demand — not just on the gas side, but on the power side as well,” explained Dr. David Dismukes of the Louisiana State University (LSU) Center for Energy Studies. “The market is already starting to correct itself. We see general economic recovery taking off in a lot of places and a lot of renewed interest in the expansion of power generation demand. A lot of that is being induced by changes in environmental regulations.”
LNG exports facilities are also expected to be a significant source of energy demand on an ongoing basis throughout the U.S. Dismukes discussed the growing demand for natural gas, and Marty Durbin, president and CEO of America’s Natural Gas Alliance, talked about the nation’s ample supply of natural gas during the recent Louisiana Chemical Association/Louisiana Chemical Industry Alliance 2014 Annual Meeting. Durbin said the nation will more than be able to meet the ongoing demand for natural gas.
“There are a number of projects that are already planned being driven by the fact we have this abundant, affordable natural gas resource,” said Durbin. “We are now the largest natural gas producer in the world and the estimates just keep going up. We surpassed Russia. This is a good news story that’s just getting better all the time.”
The U.S. is expected to double its current natural gas production level between now and 2035. Durbin added the country is finding more areas where natural gas is accessible and, from an efficiency standpoint, is consistently getting better at being able to produce it. Still, Dismukes pointed out the demand will continue to rise as the power generation sector undergoes a number of big changes.
“Power generation is a very big user of natural gas in this country and has been for the past two decades,” Dismukes said. “There’s a lot of changes in environmental regulations that are clearly going to preference natural gas power generation. We’re looking at a considerable amount of legacy coal plants throughout the U.S. that are going to be shut down and likely in very fast order if many of the proposals that are out there for existing EPA regulations do go into effect. I’ll be very surprised to see anyone announcing a new coal plant anytime soon. Everything’s going to be natural gas coming in.”
Durbin explained the growth in the nation’s natural gas supply has been significant enough that companies have 456 industrial projects planned in the U.S. between 2014 and 2021. He said the most productive natural gas well in the U.S. is in Susquehanna County, Pennsylvania, and is producing just over 30 Mcf/day.
“Ten years ago, the most productive natural gas well produced about 5 Mcf/day,” said Durbin. “That’s a sixfold increase in the efficiency of the most productive well.”
He then gave the example of a different well in Susquehanna County that produces enough natural gas every day to meet the daily needs of Philadelphia.
“That’s just one well site from one company in one county in Pennsylvania,” said Durbin. “We didn’t know five years ago where this was going to go. Frankly, if you looked at the production methods that were in use five years ago and what we’re doing today, I’m excited to see where it’s going to be three years from now.”
Dismukes said structural changes in natural gas demand have been going on for more than two decades and will continue, particularly on the power side. He also pointed out export opportunities continue to grow but will be subject to market forces and will have to compete in global markets. Durbin said LNG exports are a real opportunity for the U.S. to play a bigger role in geopolitics.
“LNG exports are something we should all be interested in,” added Durbin. “I firmly believe there are natural markets constraints that are going to keep the levels of exports at a reasonable level.”
For more information on the LSU Center for Energy Studies, visit www.engr.lsu.edu or call (225) 578-4400. For more information on America’s Natural Gas Alliance, visit http://anga.us or call (202) 789-2642.
