Saturday, September 28, 2019

Oil-gas-links and the outlook on US shale gas

Natural Gas World gives an interesting insight on the US oil and gas market:

"According to a Reuters report, LNG bagged a 14% share of the European gas market in the period October 2018 to August 2019, up from 5% in the same period a year earlier. Gas Infrastructure Europe reports that gas storage in Europe was 89.65% full as of August 20, with storage in Austria, Belgium, the Czech Republic, Denmark, France, Germany and the Netherlands over 90%. European gas prices reached a 10-year low in July … yet still the LNG comes.
Despite general European antipathy towards hydraulic fracturing, it is ‘fracking’ which has delivered this tsunami of cheap gas. In doing so, it addresses a fundamental long-standing driver of European energy policy – the fear that as European domestic gas production falls, Europe will become ever more dependent on the few major pipeline exporters that provide the majority of its imported gas supplies -- with Russia to the fore.
That concern now looks much less severe thanks to US LNG, largely derived from shale drilling. The EIA reported that the US last year saw one of the largest absolute increases in oil and gas production from a single country in history."


"If a recessionary outlook is assumed, oil demand forecasts will continue to fall and with them oil prices and US shale drilling activity, which will worsen the financial stress already evident in the sector. If this turmoil results in a slowdown in oil production, it is likely to have a knock-on impact on US gas production similar to the last contraction in US shale drilling.

The US will then find itself in an unfamiliar position. Steadily rising demand for gas as long-lead time infrastructure – notably LNG plants – is completed, but a slowdown in production growth. This is likely to push gas prices higher.

Just as gas prices have fallen as oil prices rose, the reverse will go into effect, which would come as an unwelcome surprise both to US users of gas, but also their European counterparts who have this year become used to very low prices for imported US LNG."

You can read the rest of the piece via the below link: 

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