For three decades, US domestic gas production dragged its feet. Now, new technology has made shale gas economically viable, giving the US more energy security, lower gas prices, and enabling it to overtake Russia as the world’s largest producer. In five years US gas output has risen 30%, with shale gas now comprising 20% of total production. Daily output is now 1.7 billion cubic metres, an annual increase of 120 million cubic metres per day, despite daily production in the Gulf of Mexico declining by 28 million cubic metres this year. Shale gas production is set to accelerate, but US gas prices have already fallen by 50%.
“The US is sitting on vast unconventional gas reserves in the form of shale and tight sands. US natural gas prices have continued to decline as production surged to new record highs, but producers keep on drilling despite the low price environment. Drilling costs have fallen precipitously, and the process is quicker, more efficient and more productive than they ever thought it would be,” says Sabine Schels, gas analyst at Bank of America-Merrill Lynch.
