The American energy renaissance is being fueled in large part by the staggering uptick in the production and discovery of natural gas. Now, the resource is being used in a wide variety of new applications as the nation’s consumers gear up for it to be an even more major resource moving forward.

However, despite increased production, drillers have encountered many obstacles, underscoring just how important infrastructure is to the success and future of natural gas.

Obstacles for Natural Gas Production

This year’s harsh winter slowed natural gas production, even stopping output entirely in some wells because they froze, according to The Associated Press.

Overall output of natural gas in the U.S. slightly increased throughout the past year, with a 3.2 percent rise compared to January of last year, according to Bentek Energy estimates reported on by Energy Manager Today. However, the output was down 1.1 percent in January 2014 from December 2013 due to weather and pipeline issues, reinforcing how vital a functioning supply chain is.

Increased Demand for Natural Gas

American manufacturers have increased their reliance on natural gas under the belief the resource will be available for their consumption.

Power companies are switching from coal and nuclear power to natural gas, and manufacturers are building new vehicles that run on natural gas, according to the AP. A natural gas analyst at Citi predicted demand will increase 33 percent by 2020, up from the demand of 73 billion cubic feet a day in 2013.

Even though Americans are relying on a healthy supply of natural gas, these issues caused an unexpected shortage recently.

Current storage levels of natural gas are at the lowest they’ve been since 2008, according to the AP, and California and Texas authorities asked residents to decrease their energy consumption because utilities were running perilously low on the gas needed to run the power plants.

Increased Prices for Natural Gas

The end result of high demand and a lack of product is making natural gas prices soar.

The futures price of natural gas in 2014 averages $4.82 per 1,000 cubic feet, the AP reported. This is 20 percent higher than last year’s average and 70 percent higher than 2012 when gas prices fell below $2.

Retail prices are also expected to increase 12 percent this year.


Leave a reply

Your email address will not be published. Required fields are marked *


Log in with your credentials

Forgot your details?