Shale Gas Annual Growth Over Fourfold to 2035

Shale gas production in the United States grew at an average annual rate of 17 percent between 2000 and 2006. Early success in shale gas production was achieved primarily in the Barnett Shale in Texas. By 2006, the success in the Barnett shale, coupled with high natural gas prices and technological improvements, turned the industry focus to other shale plays. The combination of horizontal drilling and hydraulic fracturing technologies has made it possible to produce shale gas economically, leading to an average annual growth rate of 48 percent over the 2006-2010 period.

Shale gas production continues to increase strongly through 2035, growing almost fourfold from 2009 to 2035. While total domestic natural gas production grows from 21.0 trillion cubic feet in 2009 to 26.3 trillion cubic feet in 2035, shale gas production grows to 12.2 trillion cubic feet in 2035, when it makes up 47 percent of total U.S. production—up considerably from the 16-percent share in 2009 (See Graph).

The estimate for technically recoverable unproved shale gas resources is 827 trillion cubic feet. Although more information has become available as a result of increased drilling activity in developing shale gas plays, estimates of technically recoverable resources and well productivity remain highly uncertain.

Estimates of technically recoverable shale gas are certain to change over time as new information is gained through drilling, production, and technological and managerial development. Over the past decade, as more shale formations have gone into commercial production, the estimate of technically and economically recoverable shale gas resources has skyrocketed. However, the increases in recoverable shale gas resources embody many assumptions that might prove to be incorrect over the long term.

Alternatives examine the potential impacts of variation in the estimated ultimate recovery per shale gas well and the assumed recoverability factor used to estimate how much of the play acreage contains recoverable shale gas. In those cases, overall domestic natural gas production varies from 22.4 trillion cubic feet to 30.1 trillion cubic feet in 2035, compared with 26.3 trillion cubic feet. The Henry Hub spot price for natural gas in 2035 (in 2009 dollars) ranges from $5.35 per thousand cubic feet to $9.26 per thousand cubic feet in the alternative cases, compared with $7.07 per thousand cubic feet.

Despite rapid growth in generation from natural gas and nonhydropower renewable energy sources, coal continues to account for the largest share of electricity generation

Assuming no additional constraints on CO2 emissions, coal remains the largest source of electricity generation because of continued reliance on existing coal-fired plants. EIA projects few new central-station coal-fired power plants, however, beyond those already under construction or supported by clean coal incentives.

Generation from coal increases by 25 percent from 2009 to 2035, largely as a result of increased use of existing capacity; however, its share of the total generation mix falls from 45 percent to 43 percent as a result of more rapid increases in generation from natural gas and renewables over the same period. The role of natural gas grows due to low natural gas prices and relatively low capital construction costs that make it more attractive than coal. The share of generation from natural gas increases from 23 percent in 2009 to 25 percent in 2035.

Electricity generation from renewable sources grows by 72 percent, raising its share of total generation from 11 percent in 2009 to 14 percent in 2035. Most of the growth in renewable electricity generation in the power sector consists of generation from wind and biomass facilities (Figure 3). The growth in generation from wind plants is driven primarily by State renewable portfolio standard (RPS) requirements and Federal tax credits.

Generation from biomass comes from both dedicated biomass plants and co-firing in coal plants. Its growth is driven by State RPS programs, the availability of low-cost feedstocks, and the Federal renewable fuels standard, which results in significant cogeneration of electricity at plants producing biofuels.

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