Editor's note: This article originally appeared in the December 2019 issue of E&P. Subscribe to the magazine here.
It’s hard to believe that it is already the end of 2019, much less the end of a decade. As the year ticks closer to 2020, now is a good time to reflect on shale’s past and future, and on how this ancient mud turned stone provided a medium that modern-day industrial artists harnessed to transform the global economic and energy futures for many.
Twenty years ago, U.S. energy concerns were focused on the declining rate of production of oil and gas and the increasing need for the importation of the energy resource duo. Crude oil and NGL production in 1999 was 7.8 MMbbl/d, according the U.S. Energy Information Administration’s (EIA) Annual Energy Review 1999, with 10.5 MMbbl/d imported to meet demand. On the natural gas side in 1999, 18.7 Tcf was produced in the U.S., according to the EIA report.
This all changed in a few short years when the perfect blend of chemistry, technology and ingenuity—that had been quietly brewing since 1997—delivered commercial success to the Barnett Shale. By 2005, it alone was producing almost half a trillion cubic feet per year of natural gas, according to a 2013 EIA report. The Barnett Shale breakthrough inspired others to apply those same techniques in other shale formations around the U.S. with equally inspirational results. The EIA reported that 2018 annual crude oil production reached 10.96 MMbbl/d and forecast 2019 production would average 12.3 MMbbl/d in its Short Term Energy Outlook released in October. Annual U.S. dry natural gas production was 83.4 Bcf/d in 2018 and will average 91.6 Bcf/d in 2019.
One of my early assignments for E&P was to attend and report on the opening reception for the 17th International Conference & Exhibition on Liquefied Natural Gas in April 2013 in Houston. I heard many conversations that night about the very real possibility that the U.S., with its shale gas riches, could soon change its status from an importer of LNG to exporter. It was a possibility turned reality less than three years later with the first cargo of LNG shipping out of Louisiana’s Sabine Pass liquefaction terminal in February 2016. North American shale gas represents 20% of global gas production, according to the DNV GL Energy Transition Outlook 2019, adding that when considering unconventional gas production only, North America provides 90% of global supply. Most of the gas produced in the U.S. is used for electricity production, according to the outlook. However, this is forecast to change as gas “gives way to cheaper power from solar PV [photovoltaics] and wind; after 2030, power production from solar PV and wind will surpass gas.”
In recognition of the rapidly growing role of LNG to the future of unconventional gas development, this issue of E&P includes a deep dive into the growing U.S. LNG market. It includes a market overview, a look at infrastructure projects, updates on plant construction and more.
While gas consumption declines, gas production is expected to remain at current levels. The excess gas will be exported as LNG to countries with growing energy demands (primarily China and India), creating a boom in liquefaction capacity additions, according to DNV GL. The group predicts that capacity would need to grow from scratch to reach 500 MMtonnes in 2050, finding that more than 60% of global LNG capex will be invested in North America in the next five years. And what an interesting five years it will be, with the past 20 being so revolutionary!
Read E&P's special report on LNG:
LNG Overview: US LNG Producers Shift Into High Gear Global Market
LNG Infrastructure: Midstream Connections Solid, Future Waves Less So
Oilfield services companies will need to preserve capital and ride out the storm before they can expect to see an uptick in activity.
A U.S. Supreme Court decision recognizing about half of Oklahoma as Native American reservation land has implications for oil and gas development in the state, raising complex regulatory and tax questions.
Canceled pipelines and green ambitions could point to a declining role of oil and gas in the U.S. energy mix.