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More on Natural Gas

We've written before about David Dismukes, associate director and a professor at Louisiana State University's Center for Energy Studies (CES). He has added several presentations to the CES website highlighting the impact of natural gas extraction on the energy sector. He writes, "New natural gas supply availability is having considerable impacts on all energy markets today and on longer term" and that the "[t]raditional sectors of energy industry have proven they are high technology, high capital, and high growth."

Charles Goodson, president of PetroQuest Energy—an independent energy company engaged in the exploration, development, acquisition, and production of oil and natural gas reserves—and a member of the Atlanta Fed's Energy Advisory Council, presented "Natural Gas—The Bridge to our Energy Future" to the Atlanta Rotary Club in early October. His main points were similar to Dr. Dismukes in that the revolution in domestic energy production presents the U.S. economy with a significant opportunity. Among Mr. Goodson's points were the following:

"Natural Gas production has increased 16.6% from the end of 2008 despite a 60% drop in the natural gas rig count. U.S. natural gas consumption has not kept up with supply. New demand sources need to be considered given the available supply."

"The ramp up in natural gas production from shale gas has led to the collapse of natural gas prices and driven the industry towards oil/liquids rich production. Improvements in technology, notably horizontal drilling and hydraulic fracturing, are the key drivers in the ability to produce more hydrocarbons."

"Liquefied Natural Gas (LNG) imports are at an all-time low due to the increase in domestic supply. LNG export from the U.S. is likely given the excess supply. The greatest step the U.S. could make towards energy independence is to substitute natural gas for oil domestically which would help reduce foreign imports."

Some people are opposed to the process that has led to the increase in domestic energy production, and it is not my intent to jump into that debate. What seems inescapable is the fact that the United States is producing more and more oil and natural gas. What is also apparent is that we have not figured out what to do with it all yet.

Photo of Michael ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed's research department

October 11, 2012 in Energy | Permalink


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