Prices rose from the collapsed levels in the prior year and are back where they’d been in 1996, down by 70% from the peak in 2005.
By Wolf Richter for WOLF STREET.
When it comes to US natural gas production, exports, and imports, a key element is that the price of natural gas in the US has collapsed since about 2008, a few years after US production from fracking took off majestically and reversed the years-long trend of declining production.
Currently, natural gas futures trade for about $3.76 per million Btu, after a 12-month surge, roughly the same as in some periods in 1996 and 1997. The year-ago price of around $1.90 was right back where it had been in 1995, despite 30 years of inflation in other products and services. The price collapsed as overproduction set in by 2009, with no liquefied natural gas (LNG) export terminals in the lower 48 states as an outlet.
A substantial part of natural gas is produced as a byproduct of fracked oil wells. Some years ago, in shale fields that lacked gas-takeaway capacity, the associated gases coming from the oil wells, including methane, were flared, a huge waste of a valuable natural resource, and also a big source of air pollution.
In North Dakota’s portion of the Bakken Formation, between 30% and 35% of the associated gases were flared in 2012 through 2014. Flaring is now down to 5%. Across the US, flaring is down to about 0.5% of total gas produced, from close to 2% in 2018, according to EIA estimates.
This concept of associated natural gas – natural gas as byproduct of oil production from fracked wells – led to overproduction of natural gas amid limited demand and was one of the factors why the price collapsed.
US natural gas production: Drill Baby Drill since the early 2000s.
Marketed production of natural gas rose by 0.6% in 2024, to a record 41.4 trillion cubic feet, according to EIA data on Friday.
Since 2006, production has surged by 113%. Since 2017, production has surged by 41%. The fracking boom in the US – including the surge in crude oil production – has rejiggered the energy landscape globally.
Some Drill-Baby-Drill milestones:
- In 2011, the US became the largest natural gas producer in the world.
- In 2016, natural gas surpassed coal as the dominant fuel for power generation in the US.
- In 2016, the first LNG export terminal in the lower 48 states came on line, and large-scale LNG exports began.
- In 2017, the US became a net exporter of natural gas, exporting more than importing.
- In 2023, the US became the largest exporter of LNG.
- In 2024, power generation from natural gas rose by 3.3% to a record of 1,864,874 GWh, with a share of 42.7% of total power generated. Coal’s share dropped to a record low of 14.9%, from 51% in 2001 (I discussed US power generation by source in 2024 here).
US natural gas exports.
The US exports natural gas via pipelines to Mexico and Canada. Since 2016, the US has been exporting natural gas as LNG to the rest of the world. As more export terminals were built, LNG exports soared, creating more demand for US production.
Total exports of natural gas via pipeline and as LNG rose by 1.3% in 2024 to a new record of 7.71 trillion cubic feet, or about 18% of US marketed production.
LNG exports rose by 0.6% to a record 4.37 trillion cubic feet.
Pipeline exports to Mexico and Canada rose by 2.3% to 3.34 trillion cubic feet:
- To Mexico: +4.6% to a record 2.35 trillion cubic feet
- To Canada: -2.8% to 1.0 trillion cubic feet.
Imports increased by 7.4% to 3.14 trillion cubic feet, of which 3.13 trillion cubic feet via pipeline from Canada, and 0.016 trillion cubic feet via LNG in the Boston area, which is still inadequately connected via pipeline to the producing areas in the US.
This chart shows imports (blue) as a negative figure and total exports as a positive figure (red). The import peak was in 2007.
Canada imports from the US and the US imports from Canada because the geographical layout of where pipelines, producing areas, and population centers are. On a net basis (exports minus imports), the US imported from Canada 2.13 trillion cubic feet in 2024.
LNG exports by region.
LNG exports to Europe – the largest buyer of US LNG for the third year in a row – dropped by 22% from the record in 2023. They still accounted for nearly half of US LNG exports (dotted red line in the chart below). Germany started setting up LNG import terminals in 2022, and by 2024, 15% of US LNG going to Europe was unloaded in Germany, up from 0% in 2021. The other big importing countries were those with LNG import terminals that feed into the European system of pipelines, on top of which were the Netherlands, France, the UK, Spain, and Italy.
LNG exports to Asia rose by 33%, but were below the record in 2021. All major LNG importers increased their imports. The biggest importers were Japan, South Korea, China, India, and Taiwan (green).
Exports to Latin America and the Middle East & Africa rose but remained relatively low.
And in case you missed it last week: Demand for Electricity Takes Off, Driven by Data Centers (AI, Cloud, Crypto) and EVs. US Power Generation by Source in 2024: Natural Gas, Coal, Nuclear, Wind, Hydro, Solar, Geothermal, Biomass, Petroleum.
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I find drill baby drill to be preferable to the Quixote approach of chasing windmills and building huge solar farms with questionable results and with ensuing grossly negative impacts to the landscape.
Of course, there is no perfect energy solution, except the pie in the sky fusion perhaps; how close are we to that? Let’s see, just as an analogy what the leaders and media tell us, Time magazine was stating in late 80s that super conduction was then possible. How close are we to that now?
Physical sciences, including those that lead to superconductors and flying cars, advance linearly and so more slowly that people’s imagination. Data sciences, including those that lead to analysis and AI, advance exponentially and so much faster and in more directions than people’s imagination.
High-temperature superconductors will likely come but the data sciences still need to advance to the point of being able to predict them rather than stumbling along with human-brain prediction. If they are physically possible, which seems likely, then I’d guess we’ll start seeing them within 15 years.
Well I am happy with that info, I hold many LNG producers, shippers, pipelines and other related stocks. Lots of dividends in that field..Europe and also data centers are in big need of LNG. I believe it’s going to be greatly needed now and in the near future as well!
Why am I paying so much more since Covid for the natural gas that heats my home in Henderson, NV if prices are so low?
Get mad at your utility.
Merchandise trade deficit for December 2024 set a record at $122,000,000,000 (billion). That record lasted for One Month. The trade deficit for January 2025 was $153 billion!!! This deficit takes away from GDP, 1st quarter estimate GDP dropped to negative 1.5%!!
Hope we can ship lots of this natural gas—we need all the trade dollars we can generate.
Yes, they’re trying to front-run any tariffs. They did that last time too, and after the warehouses were stuffed to the rafters, they stopped bringing in stuff, and imports plunged, and GDP growth bounced back. So it balances out over time. But it does move GDP growth from one quarter to the next.