NCPA - National Center for Policy Analysis


August 25, 2008

American natural gas production is rising at a clip not seen in half a century, pushing down prices of the fuel and reversing conventional wisdom that domestic gas fields were in irreversible decline, says the New York Times.

Competition among companies for rights to the new gas has set off a frenzy of leasing and drilling:

  • Domestic gas production was up 8.8 percent in the first five months of this year compared with the period a year earlier, a rate of increase last seen in 1959, during the great drilling boom that followed World War II.
  • Most of the gain is coming from shale, particularly the Barnett Shale region around Fort Worth, which has been under development for several years.
  • The increase in gas production stands in sharp contrast to the trend in domestic oil production, which has been declining steadily since 1970 and dropped 21 percent in the last decade alone.
  • The Barnett region proved that, using new technology, shale gas could be extracted on a large scale, but lately, companies have set their sights on shale formations that could produce far more gas than the Barnett.

According to a new report by Navigant Consulting, paid for by a foundation allied with the gas industry, there could be as much as 842 trillion cubic feet of retrievable gas in shales around the country, enough to supply about 40 years' worth of natural gas, at today's consumption rate.

Rising production of natural gas has significant long-range implications for American consumers and businesses, says the Times.  A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive.

Source: Clifford Krauss, "Drilling Boom Revives Hopes for Natural Gas," New York Times, August 25, 2008.

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