By BRETT CLANTON Copyright 2009 Houston Chronicle
Nov. 21, 2009, 12:31AM
Natural gas produced from shale rock formations like Texas' Barnett shale play could account for one third of total U.S. natural gas supply by 2025, up from 14 percent today, a prominent energy forecaster said Friday.
The jump will come as the costs of unlocking the dense formations decline and demand for clean-burning natural gas rises over time, analysts with U.K.-based consultant Wood Mackenzie said said in a briefing with reporters.
But natural gas prices could remain low during the next few years as a spate of new coal-fired electricity plants open, reducing the overall amount of the fuel needed in the U.S. for power generation.
Once the plants are completed, however, natural gas demand could rise sharply as older coal-fired plants are retired and government policies show a greater preference for cleaner energy sources, said Jen Snyder, a North American gas analyst with Wood Mackenzie.
Prices could even spike to $10 per million British Thermal Units in the 2013-2014 timeframe as producers struggle to keep up, before falling back to the $6.50 range after that period, she said.
The oil and gas industry has recently touted shale gas formations as a clean source of domestic energy that can provide more than 100 years of natural gas at today's demand levels.
But natural gas production has fallen this year with the recession, spurring a decline in the number of natural gas drilling rigs in the U.S. to decline by more than 50 percent from a peak of 1,600 in August 2008.
Some oil and gas producers have reduced capital spending plans next year on concerns about the durability of the economic recovery. Yet, it is likely to be only a temporary time out, especially in emerging shale plays.
The annual average North American shale gas production will rise to 29.5 billion cubic feet per day in 2025, up from 8.8 billion cubic feet per day this year, Wood Mackenzie analyst Phani Gadde said.
This year, total U.S. natural gas consumption will decline by 1.9 percent to 62.2 billion cubic feet per day and by another 1.1 percent in 2010, according to a recent Energy Information Administration forecast.
Yet, with the economy growing again and producers trimming natural gas output amid record storage levels, the average spot price in 2009 should rise from $4.03 per million cubic feet to $5.01 in 2010, the EIA said.
On Friday, natural gas added 8.2 cents to settle at $4.42, while benchmark crude dropped 74 cents to settle at $76.72 a barrel.
brett.clanton@chron.com
http://www.chron.com/disp/story.mpl/business/energy/6732444.html
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