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Brattle Group prepares natural gas report for API

LNG Industry,

Brattle consultants have prepared a report for the American Petroleum Institute (API) that provides a comprehensive overview of the natural gas market.

Understanding Natural Gas Markets, authored by Steve Levine, Paul Carpenter and Anul Thapa, discusses the implications of increased US natural gas production. Technological advancements in natural gas extraction methods have made unconventional shale gas resources more accessible and economic.

As of 2013, shale gas production accounted for approximately 40% of US Lower 48 natural gas production, compared to approximately 5% in 2006. The growth in natural gas supply has outpaced demand growth, resulting in lower prices and lower volatility.

The report points out several key trends including:

  • US natural gas demand is increasingly served by domestic production from unconventional shale gas sources rather than imported natural gas from Canada and other conventional supplies.
  • Natural gas use for electricity generation is expected to increase due to low prices and expectations of continued coal plant retirements.
  • Industrial sector gas demand is also expected to increase as a result of low natural gas prices.
  • The growth in shale gas production has resulted in shifting flows on the US interstate pipeline network.
  • The substantial production increases and low prices in the US are leading to the development of both LNG and pipeline export projects, which could result in the US becoming a net exporter of natural gas.

The authors discuss these trends in detail and describe some of the key changes that will affect US natural gas markets and prices in the coming years.

The report can be downloaded from the API website.

Adapted from press release by Katie Woodward

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