US Gas Supply Higher Than Thought: Can Pipelines Keep Pace?

The US, already a top producer of natural gas, could see even more future supply than previously thought as demand for the cleaner-burning fossil fuel continues to rise. But whether infrastructure to move that gas to market can keep pace is an open question.

In a biennial assessment delivered this week, the Potential Gas Committee (PGC) reported an updated future US gas supply estimate of a record 3,978 trillion cubic feet as of 2022 — enough to satisfy current domestic demand for more than 100 years.

The committee’s assessment of future gas supply, which combines estimates for technically recoverable resources and proven reserve volumes, represents a 3.6% increase from the 2020 estimate. The biggest share of supply is expected to come from the Atlantic region, home to the powerhouse Marcellus and Utica shale plays. The area accounts for 40% of estimated gas resource, according to the report. Overall, shale accounts for 61% of the estimated gas resource.

With domestic gas consumption hovering near record highs, and global demand for US LNG expected to grow dramatically this decade, access to additional supply will be key, industry officials say. But it also poses challenges.

"Future gas supplies continue to increase as the energy industry innovates, improves processes, optimizes resources, invests in efficiency and reduces emissions,” said Richard Meyer, the American Gas Association's vice president of energy markets, analysis and standards. “However, to fully realize the potential of this natural gas supply, new infrastructure will be required to connect production zones to demand centers.”

“The availability of pipelines to get the product out of the shale gas fields in particular — there's only so much they can get to market without more of that infrastructure, “So for that reason, you might have inactive wells," PGC President Kristin Carter agreed.

She also cited other potential challenges to producing the additional resource quickly, including drilling permit wait times and crew shortages. "So you can have your well be kind of just in standby mode for a year or two because you're waiting on a pipeline, you're waiting on maybe some technology, or the the frack trucks, [if] the support companies are too busy and can't get to your well."

Technology Advancements

Despite the overall increase, technically recoverable resources fell slightly by 0.5% to 3,352 Tcf in 2022, said the committee comprising around 80 volunteer members who deliver biennial assessments. The decline was likely due to volumes being moved from one category to another.

For example, as drilled but uncompleted wells eventually came online following the dip of the Covid-19 pandemic, they moved through a “continuum of evaluation” from resource to proven reserves to production, Carter said.

That decline was also more than offset by new discoveries, according to the committee’s report. The Rocky Mountain region, for example, showed an 8% increase in potential future supplies as operators drilled more in resource plays in areas like the Niobrara Shale.

“Technology advancements happen every day,” said Steven Sonnenberg, the PGC's interim director. “And so even though one area might be slightly down, in this report, two years from now they may be up because of changes either in drilling, rig activity or technology advancements and such.”

Gas-to-Oil Ratios

Rising gas-oil ratios (GOR) in maturing crude-heavy plays are expected to contribute a larger share to future gas supplies, according to a panel of geologic experts that contributed to the findings.

“We do know that's occurring in some areas,” Sonnenberg said in a Q&A to discuss the group’s most recent findings. “The numbers that we assess are the gas production, and I think you also have to realize it’s a natural process that occurs within wells on depletion of the well.”

Sonnenberg said the group monitors GORs as part of its research, and he speculated the ratios could be a larger piece of its next assessment in 2024.

GORs have been climbing in oily areas such as the Bakken Shale of North Dakota and Eagle Ford Shale of South Texas, a sign that the crude oil resource is depleting. But some operators, notably Pioneer Natural Resources, have warned of growing GORs in the Permian Basin, the US’ premier oil-bearing play.