Energy Prospectus

China's natural gas push is too successful, creates price dilemma. Reuters.

China’s push to use more natural gas over winter in a bid to cut air pollution is running into the harsh realities of rising prices and limited supplies of the cleaner fuel. In a signal of what may become more government intervention in the natural gas market, China’s state planner ordered eight regions to meet with natural gas producers, liquefied natural gas (LNG) terminal operators and traders. The meetings are effectively a warning by the National Development and Reform Commission (NDRC) to the various players in the natural gas sector to ensure that prices don’t rise too much even as rising demand causes supply shortages. Beijing has encouraged China’s provinces to switch from coal to natural gas for both residential heating and industrial processes over winter as part of efforts to limit the smog that has in past years choked cities, including the capital. In some ways, the move has been too successful, with the industry-heavy provinces of Hebei and Shandong warning of natural gas shortages, and Hebei forcing some users to cut consumption. It’s not only the shortage of natural gas that’s causing problems. China’s domestic LNG price has risen to its highest since 2011, topping 7,000 yuan ($1,061) a tonne in the last week of November.
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Today the United States exports about 7 Bcf of natural gas per day. < 4.5 Bcfpd via pipelines to Mexico and Canada and 2.5 Bcfpd via ship in the form of LNG.

By 2020 U.S. export capacity is expect to be over 19 Bcfpd because of rising demand by Mexico and more LNG facilities coming on-line. Just in 2018, demand for U.S. natural gas is expected to rise by 6 Bcfpd (~8% higher than demand was in 2017).

Report: U.S. natural gas boom largely due to Marcellus Shale. Tribune-Review.

The shale gas boom in Pennsylvania and other Appalachian states has been the chief driver of growth in U.S. natural gas production since 2012, the U.S. Energy Information Administration said Monday. According to the EIA's Drilling Productivity Report, natural gas production in the Appalachia region — namely the Marcellus and Utica Shale plays — has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Drilling unconventional wells in the Appalachia region has become quite productive, the EIA said. The average monthly natural gas production per rig for new wells in the Appalachia region increased by 10.8 million cubic feet per day since January 2012. The EIA attributes the increase to efficiency improvements in horizontal drilling and hydraulic fracturing, including faster drilling, longer laterals, advancements in technology and better targeting of wells. Pennsylvania's natural gas production reached a new high of 15 billion cubic feet per day in October, an increase of 25 percent from year-ago levels and an increase of 80 percent from January 2013, the EIA said. Pennsylvania accounts for 19 percent of total U.S. natural gas production and 76 percent of total Marcellus Shale production.