Natural gas prices this year around the world have been disappointingly lower than expected. A warmer winter than normal, the trade war issues affecting demand and too much near term supply from new LNG plants have gutted the market and depressed prices.
The bullish story is the climate improvement focus and the need to close coal fired electricity facilities while expanding renewables and using natural gas as the interim cleaner air choice. Asia is the big user of LNG and the trade battle between the US and China has worsened the near-term situation. The growth of US shale production and new LNG facilities on the Gulf coast has for the next two-three years created a glut which will be taken up as growth returns. By 2023-2024 there should again be a shortage and that is the strategic window picked by LNG Canada to start shipping LNG to Asian customers from the coast of BC.
The shale industry in the US is located in seven basins (Chart #22). The largest basin is the Appalachian basin which is now in decline (Chart #23), with three others also showing this trend. The only growth basin of consequence remains the Permian which is the second largest of the shale areas at 16.8Bcf and has been growing as a result of the highly desired light oil of the basin.