Within a few years, the United States is expected to become a net exporter of natural gas, thanks to the shale gas boom that has driven nationwide production to historic levels since 2008, a ConocoPhillips executive told the Albuquerque Economic Forum on Wednesday morning.
The country’s “energy renaissance” has completely reversed the long-term outlook for U.S. energy independence, said Terri King, director of oil and gas operations for New Mexico.
“Previously, federal estimates projected the U.S. would import about 17 billion cubic feet per day of natural gas by 2015,” King said. “But by 2007, that outlook changed because of the shale gas revolution. Now, the forecast is for no imports by 2016, and exports of 7 (billion cubic feet) per day by 2025.”
Since the mid-2000s, modern techniques of hydraulic fracturing and horizontal drilling have opened up vast natural gas deposits in hard-rock shale formations in the Northeast, Midwest and South.
Last year, domestic production reached 25.62 trillion cubic feet of natural gas, according to the U.S. Energy Information Administration. That’s up 35 percent from 2005, and it marks the country’s eighth straight year of growth.
“We have about 20 major areas of activity in the country now,” King said. “We have huge deposits of hydrocarbons. …We’re looking at conservatively a century of supply.”
With domestic supply now exceeding demand, the industry is pursuing export strategies, with about 50 new projects for liquid natural gas export terminals awaiting government approval, King said.
Tapping foreign markets is key to sustaining production growth, because those markets offer far higher returns than in the United States, where oversupply has severely depressed prices. Producers earn about $3.90 per 1,000 cubic feet in the U.S. today, down from more than $13 in 2008.
Producers can earn more than $8 per 1,000 cubic feet in the United Kingdom, and more than $16 in Japan, King said.
Higher prices are also critical to reviving natural gas production in the San Juan Basin in northwestern New Mexico, where the national shale gas boom has had a boomerang effect.
New Mexico production fell to 1.215 trillion cubic feet in 2013, down 29 percent from the state’s peak production in 2001, according to the New Mexico Oil Conservation Division. This year, production is down slightly again, by about .05 percent as of August.
ConocoPhillips, which operates in 27 countries, is New Mexico’s No. 1 natural gas producer. About 10 percent of the company’s total annual production comes from New Mexico.