Market Stability
In its 2009 "Fueling the Future" report, Cambridge Energy Research Associates forecasts that "the power industry will likely increase the share of natural gas in the fuel mix because of the carbon footprint of natural gas-fired generation and because it can be built more quickly and easily than coal, nuclear, or hydro and will benefit from credible expectation of lower long-term natural gas prices."
Utility companies today can be confident that lower cost attainable, domestic natural gas will be in their business plans for many years to come. Here are a few reasons why:
Domestic Abundance
Thanks to dramatic increases in shale gas development in recent years, North America today has enough North American natural gas to power our nation for generations.
Greater Supply Reliability
New shale gas resources have altered the supply outlook in three key ways:
- Rapid, near-term supply growth due to relatively short well drilling times and very high initial production rates;
- Greater flexibility and responsiveness to market demand; and
- Long-term supply stability assured by a larger and geographically diverse well portfolio with shale wells producing for at least 50 years.
More Onshore Production
The new resource areas are predominately onshore, making them generally less difficult and costly to develop than offshore resources, and most importantly, eliminating hurricane-related supply interruptions-one of the historic causes of price volatility.
Enhanced Pipeline & Storage Infrastructure
As domestic natural gas supplies have increased dramatically in recent years, the interstate pipeline infrastructure has responded with a corresponding rapid expansion. Enhanced pipeline infrastructure reduces regional pricing disparities and helps ensure nat gas is an energy supply we can count on for supply reliability.
There are more than 2.5 million miles of energy pipelines in the United States. That's enough to circle the earth 100 times. This includes:
- 324,000 miles of gas transmission and gathering pipelines; and
- More than 2 million miles of natural gas distribution mains and service pipelines
Since mid-2008, more than 7.0 Bcfd of new pipeline infrastructure has been added, with commitments to an additional 8+ Bcfd within the next three years. And, since 2000, more than 200+ Bcf of new working gas storage capacity has been added to increase daily deliverability to meet peak demand requirements--giving our nation a total storage capacity in excess of 4.0 Tcf.
Geographically Diverse Production
Geographic supply diversity, coupled with robust pipeline infrastructure development, has not only improved the ability to quickly move natural gas where it is needed, but has also mitigated regional price disparities andoffers end-users a more transparent and competitive gas supply market. Ongoing development will further these positive supply trends.
Expanded LNG Capacity
LNG import terminal capacity is now more than 10 bcf/day, well in excess of current requirements of about 1.5 bcf/day, ensuring access to expanding global natural gas production and liquefaction capacity if needed in the future.
Reduced Market Risks
These developments are all important factors in eliminating the likelihood of future natural gas price supply disruption and assuring price stability in the new age of natural gas. As a result, many analysts predict the market will see greater use of long-term contracts between natural gas suppliers and high-volume customers
Collectively, our new gas resources are good news for energy consumers on multiple fronts: greater energy and economic security; a robust, flexible, and reliable portfolio of supply choices; and more stable, predictable prices.
