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Shale pushes US gas to all-time high

Price rises spurred by shale output and fuel switching

US NATURAL gas production and consumption hit all-time highs last year, spurred by shale output and fuel switching, according to new figures from Cedigaz. And while US liquefied natural gas (LNG) imports sank, global LNG trade rocketed.

The latest Cedigaz estimates put US gas output at 610.43 billion cubic metres (cm) in 2010, up by 4.8% over 2009. Shale gas now represents nearly 20% of US dry-gas production, with output from Louisiana’s Haynesville play overtaking the Barnett Shale in Texas in March this year.

In Canada, gas production fell by 4.5% last year, to 152.4 billion cm, with a significant loss in Alberta output affecting overall figures. But Cedigaz saw more Canadian natural gas drilling in the last quarter of 2010, possibly reversing the downward trend, with companies focusing on lower-cost shale-gas projects in British Columbia and liquids-rich shale plays.

Soaring US demand

And while Canadian gas consumption dropped to 82.48 billion cm, US demand reached a new record of 627.4 billion cm, up by 5.7% compared with 2009. “This was the main result of additional gas use in the industrial and power-generation sectors,” Cedigaz said. US gas demand for electricity generation grew by 7.4% to 208.8 billion cm, while natural gas demand for transport fuels was up by 12.7%, to 900 billion cm.

The boom in shale gas output saw US LNG imports drop by 11%, to 20.7 billion cm, with depressed domestic Henry Hub gas prices discouraging imports, despite growth in the global LNG market.

“LNG trade posted a record and impressive growth in volume terms [up by 52 billion cm] that has never been observed since the beginning of the world LNG industry,” Cedigaz said. “This exceptional growth in world LNG trade was characterised by double-digit growth rates in the main three LNG importing zones: North America (+11%), Europe (+26%) and Asia-Pacific (+16%).”

New importing regions such as South America (Brazil, Chile, Argentina) and the Middle East (Kuwait, Dubai) were also becoming significant buyers, increasing global market share to 3.6% from 1.2%, it added.

Global gas markets overall grew in 2010, with marketed supply up by 7.3% and around 4% higher than before the financial crisis in 2008, according to Cedigaz. It said growth was driven by exceptionally cold winters in the US and Europe; hot summers in Asia leading to more gas consumption to meet electricity demand; and high energy demand from economies pulling out of recession.

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