World Natural Gas production

US continues to distance itself as the world leader of natural gas
November 21, 2014 – 11:13 am

pedersen-2014-gas-productionOver the last decade, the United States has firmly established itself as the world’s largest natural gas producer. This significance of this is difficult to overstate, as less than a decade ago growing natural gas demand and declining production was putting the US on course to import significant amounts of gas from abroad.

The growth has created a buzz throughout the entire commodity industry and around the world. Folks that cover oil, ethanol, electricity, coal, natural gas liquids, petrochemicals, and grain often comment about the exceptional growth of the US natural gas industry, sharing thoughts on how big a role gas will play in the US and abroad.

As a fan of the US Energy Information Administration, the BP Statistical Review of World Energy, and International Energy Agency, I wanted to take a look at how the US compares with other natural gas behemoths to see how the US natural gas industry compares from a few different perspectives.

pedersen-2014-gas-production-reservesProduction

Globally, the race for the top natural gas producer has been a two-horse race between the US and Russia. Iran, Canada, Qatar, Norway and China are the other five countries that produce more than 100 Bcm/year, and together, these seven countries produce roughly 60% of global production.

The 2015 BP statistical review, released in June, shows the US produced 728.3 Bcm of natural gas in 2014, a 6.1% increase from 2013. In contrast, Russia produced 578.7 Bcm of gas in 2014, a 4.3% decline from 2013. In Imperial units, this equates to 70.5 Bcf/d and 56 Bcf/d, respectively (as using the conversion calculation here).

pedersen-2014-gas-consumptionReserves

In my time studying and working in the energy space, my opinion on proven reserves has transformed. At the beginning, I took them very seriously and literally. Now I believe reserves are highly subjective and variable, as I’ll explain.

There are three classifications of reserves: Proved, probable, and possible.pedersen-2014-gas-exports Proved (P90) reserves mean that the oil company that owns the asset believes there is a 90% certainty that the assets are in the ground and can be extracted under today’s economic conditions. Probable (P50) means that there is a 50% certainty, and possible (P10) reserves are given a 10% certainty.

Some of the regions that have the largest reserves of hydrocarbons, including gas, are not transparent. How reserves are classified is in many ways a guessing game. There are many examples where companies and countries have exaggerated their hydrocarbon reserves. Why would they do this? A company’s value is highly dependent on the amount of proved reserves it owns. As for countries, those that are part of OPEC face production quotas that are set by reserve levels. The more reserves the country says they have, the higher their allocation quota.

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Source: blogs.platts.com
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Popular Q&A
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How is natural gas used in the US?

Natural gas is used primarily for heating our homes in the winter months. It is also used to heat water and to wash clothes. Another use for natural gas is to fuel many vehicles, such as garbage trucks and transit buses. It is becoming a much more popular form of vehicle fuel.

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