As the year nears its close, the remarkable fact to look back upon is that shale gas development has reshaped the nation’s supply environment. Domestic production has risen 2.1 percent year-over-year, growth reflecting additional gas produced from shale formations and sold into market.
The resulting boon of domestic gas has reduced average imports via pipeline from Canada and LNG re-gasification terminals, both of which have decreased in volume year over year. We also see strong gas-in-storage volumes entering the winter season, with working gas reaching a record peak for a second year in a row.
At the same time, demand has increased 2.6 percent year-overyear as more gas was burned for power generation, utilized in the residential and commercial sector, and exported to Mexico. This balance has created a softer price environment with spot and near-month futures contracts trading in the low-to-mid $3 range in mid-December.
The fact is that the national supply portfolio is strong and consumers benefit. With that said, attention and concern to gas production, and in particular shale gas development, remain. This week additional public attention has been brought to hydraulic fracturing practices and drinking water quality in locations such as Wyoming, but the statements from the Environmental Protection Agency public are being strongly refuted by industry sources.
Time and additional scrutiny of the science will resolve the differences.
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