North American Natural Gas: Data Show Supply Problems

Abstract

Natural gas is increasingly the fuel of choice for domestic and industrial use and for electric power generation. With pipelines in all 50 states, gas now fuels more than one-half of United States homes. Demand for all uses is projected to rise. United States production peaked in 1971, and is in decline. The United States in 2002 imported 15% of its gas from Canada, which amount was 56% of Canada's production. However, Canada's production now also is in decline. Mexico's production declined from 1999 to 2002 against rising demand. Mexico is increasingly a net gas importer from the United States. In both the United States and Canada, intensive drilling is being offset by high depletion rates. Frontiers for more production include deep basin drilling, improved exploration and reservoir development technology, increased coalbed methane exploitation, and access to lands not now accessible because of environmental and other restrictions. Stranded gas in Arctic regions of the United States and Canada offer some potential for additional supplies, but pipeline access is at least five years to ten years or more away. Additional LNG landing facilities are needed, and are planned, but these are several years away in significant numbers. For the immediate future, rationing of available gas by the market mechanism of higher prices seems the only option. In the longer term, it seems North America will be increasingly dependent on LNG.