If the US ramps its gas output from 114bcfd to 150bcfd, mostly from shales, then how long can this resource last? And are any shale gas basins maturing? This 16-page report finds marginal costs are already rising at $0.1/mcf/year, prices can spike to $4/mcf+, and future activity may shift to the Permian, creating opportunities for E&Ps and gas midstream.
All roads lead to gas, across our recent research, as 3% pa US load growth is driven by AI, renewables are slowing, while nuclear SMRs may remain high-cost. Hence our outlook for US gas output, rising from 114bcfd in 2024 to 150bcfd in the 2040s, is updated and discussed on pages 2-4.
Questions are arising, however, from some commentators, over the resource base for US shale gas, and whether it is maturing. Hence we have gone back to first principles, to calculate how much shale gas has ever formed in North America, basin by basin, on pages 5-7.
Some basins have produced larger shares of their total gas resources than others. We focus in upon the Marcellus, Utica, Haynesville and Permian basins. If some basins are maturing, then can we find evidence for this in type curves and reported costs?
Cost deflation does seem to have slowed in the key US shale gas basins, such as the Marcellus, Utica and Haynesville, as reviewed on page 8. Capex has also risen faster than type curves, per pages 9-10.
Our updated estimates for US shale gas economics seem to imply inflation is already occurring at a rate of $0.1/mcf/year, with some shale gas basins maturing, and incentive prices can realistically exceed $4/mcf in marginal corners of these basins, per page 12.
Gas price spikes, most specifically, will occur during times when oil activity is weak, and associated gas production from shale oil plateaus or even declines. 2025 may fit this pattern, as discussed on pages 13-14.
While even the most mature shale gas basins still contain 15+ years of resources, there is over half a century’s worth of untapped gas potential in the Permian. We explore resultant E&P and midstream opportunities on pages 15-16.