Representatives of the natural gas industry said a report showing the US had 3,368 Tcf of technically recoverable gas resources at the end of 2020 supports the country's rise as an LNG exporter, despite a run-up in domestic prices in recent months.
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The Oct. 19 report by the natural gas industry's Potential Gas Committee offered "a clear affirmation that the United States possesses sufficient natural gas resources both to satisfy our domestic requirements and to help meet the world's growing demand for LNG," Fred Hutchison of the US trade group LNG Allies said during an Oct. 20 online event about the potential supply of US natural gas.
The report marked the first time the PGC reported a decline in its biannual assessment of the nation's gas resources since 2004. But committee members said US natural gas remains abundant and that it is too soon to say whether the nation's gas resource potential has plateaued. The report also comes at a time when industrial manufacturers have asked the US Department of Energy to limit LNG exports to prevent high winter prices and supply shortages.
US, global prices
Tepid production and strong global LNG export demand have helped to push NYMEX gas futures prices for the coming months beyond $5/MMBtu. But volatile prices in Asia and Europe remain significantly higher because of a global supply shortage, although benchmark prices that exceed $30/MMBtu in both regions are down from record levels seen earlier in October.
"There's every reason to expect that US natural gas prices will remain well below, far below, gas prices that are prevalent in Europe and Asia," Hutchison said.
The six major LNG export terminals that are operating in the US have been running at close to capacity for months.
Total gas deliveries to the export facilities were about 10.6 Bcf/d Oct. 19, according to S&P Global Market Intelligence pipeline flow data. New facilities in Louisiana that could begin to produce LNG by the end of 2021 -- Venture Global LNG's Calcasieu Pass terminal and a sixth liquefaction train at Cheniere Energy's Sabine Pass terminal -- stand to see those deliveries further increase.
Role of gas in energy transition
Cheniere and Venture Global are among the US LNG developers that have benefited from a renewed buyer interest in long-term contracting for LNG supplies, spurred in part by higher prices. But if elevated prices continue for an extended period, it could raise questions about the role of gas in the energy transition and about how much investment is needed in the sector, according to a study published Oct. 20 by Anne-Sophie Corbeau, a research scholar at Columbia University's Center on Global Energy Policy.
The pace of demand decline in developed economies could accelerate, coal-to-gas switching in Asia could be undermined and long-term LNG contracting could become complicated, among other potential consequences, Corbeau found.
"For the gas industry, it could prove to be a moment of truth," Corbeau said.
The PGC's assessments of technically recoverable resources include known reserves at existing production fields that have not been confirmed as economically recoverable and resources that are believed to exist but have not been discovered. The US Energy Information Administration's estimate of proved reserves uses a different approach, basing its estimates on gas resources believed to be recoverable under existing economic and operating conditions. The latest EIA assessment put US proved gas reserves at 494.9 Tcf at year-end 2019, down 1.9% year over year.
Combining the EIA estimate of 2019 proved reserves and the PGC estimate of technically recoverable resources, the committee put the future US gas supply at 3,863 Tcf, the highest on record, with US shale being the dominant source. The decline in technically recoverable reserves reported by the PGC was modest at about 0.2%, or 6 Tcf.