Why natural gas prices in US have risen sharply in the last ten years?
There are two reasons. On the supply side, it's geology. And on the demand side is the increasing importance of natural gas for power generation.
Since 1999, drilling activity in the U.S. has more than 300 percent. Despite this, production has remained flat. This surprising result stems from the maturity of the natural gas resource base in North America. Although natural gas is still available and new fields are being identified and developed many of these deposits are deeper, smaller, embedded in hard rock from which the gas is more difficult to extract and / or away from gas pipelines carry the gas to market. These deposits are also more difficult to develop more expensive, which puts pressure on the profitability of the project, even with higher gas prices. Above all, the costs of services used to find and develop new fields have increased substantially.
While production remains flat, demand is poised to continue growing, especially because the increase in consumption in the energy sector is virtually blocked in much of the newly installed generating gas is used at low rates today . But the majority of non-gas-fired power plants are operating near full capacity. As energy demand grows in tandem with economic growth, the utilization rates of gas generation is expected to grow as well.
Since 1999, drilling activity in the U.S. has more than 300 percent. Despite this, production has remained flat. This surprising result stems from the maturity of the natural gas resource base in North America. Although natural gas is still available and new fields are being identified and developed many of these deposits are deeper, smaller, embedded in hard rock from which the gas is more difficult to extract and / or away from gas pipelines carry the gas to market. These deposits are also more difficult to develop more expensive, which puts pressure on the profitability of the project, even with higher gas prices. Above all, the costs of services used to find and develop new fields have increased substantially.
While production remains flat, demand is poised to continue growing, especially because the increase in consumption in the energy sector is virtually blocked in much of the newly installed generating gas is used at low rates today . But the majority of non-gas-fired power plants are operating near full capacity. As energy demand grows in tandem with economic growth, the utilization rates of gas generation is expected to grow as well.
