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The Shale Gales 10th birthday present, a massive economic resource estimate

20 March 2018 Samuel Andrus

It has been 10 years since the “Shale Gale” first began to emerge from the Barnett Shale and commenced a wholesale turnaround of the U.S. natural gas industry. In a February 2009 paper entitled “The Shale Gale: The Implications for North American Natural Gas Pipeline Development,” IHS Markit first identified the transformation potential. This was followed in March of 2010 with a report entitled “Fueling North America’s Energy Future” which identified over 900 Tcf of economic natural gas resource that could be produced at a Henry Hub price of under $4/MMBtu. With the porting of fracking technology from natural gas to oil, significant volumes of associated gas were added to the economic resource. IHS Markit’s most recent update has identified in excess of 1200 Tcf of natural gas resource that is economic at a Henry Hub price below $4/MMBtu (see Figure 1). The economic resource base continues to expand in spite of having consumed over 260 Tcf in the intervening years. In fact, the estimated economic resource could serve forecast 2018 demand of 34 Tcf for the next 40 years at under $4/MMBtu. However, demand is expected to grow requiring more infrastructure which, absent further discoveries or major productivity improvements, will likely drive Henry Hub prices above $4/MMBtu in real terms to support the infrastructure capital investment.

Figure 1: Break even at Henry Hub ($/MMBtu) for natural gas resources (Tcf).

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