Capital Commerce: Tapping out of natural gas
Since Hurricane Katrina swamped a significant portion of the nation's natural gas production, leading to government predictions of sky-high home heating costs this winter, policymakers are talking about the need to find more gas outside the disaster corridor. But U.S. natural gas production is already approaching its limits. A new geological assessment by the Potential Gas Committee, a volunteer group of experts from industry, government, and academic institutions, finds that the energy industry is barely uncovering enough new natural gas in the United States to make up for what the nation is consuming each year. In the biennial report, the committee estimates that the country's natural gas resource base is now 1,119 trillion cubic feet (TCF), down 0.7 percent from the last measurement two years ago.
Some resources are expanding, according to the group, which is sponsored in part by the big electric utility organization the American Gas Association. More natural gas can be recovered from shale and other deep underground formations, for example, on account of technology improvements. But those increases are almost entirely offset by the 38 TCF in additional gas the nation has consumed since 2002.
There's still plenty of natural gas in the United States. The problem is, much of it is out of reach. Since the most accessible gas fields have already been tapped, the industry will have to dig ever deeper wells that cost more money. Parts of Alaska are brimming with gas–but there are no pipelines ranging from the gas-rich regions to the lower 48. And there's a federal moratorium on drilling into the known resources on both coasts of the country.
That means that the Gulf of Mexico will continue to be the "biggest player" in the business as far out as 2025, says John Curtis of the Colorado School of Mines, director of the Potential Gas Committee. The Gulf contains 26.2 percent of the nation's future natural gas resources and 34.1 percent of the resources in the lower 48 states. In the future, says Curtis, harsh weather and other factors will pose "significant challenges" to keeping production up in this region. The bottom line: higher natural gas prices for the indefinite future.
Capital Commerce tells usnews.com readers how decisions made in Washington affect business.