Report forecasts U.S. natural gas exports

Demand for natural gas is expected to increase 25 percent over the next five years with exports accounting for more than half that growth, according to a new report from a cooperative bank.

The report, titled “U.S. Natural Gas Outlook through 2020: Demand Is the New Captain of the Ship,” states that demand for natural gas has grown at the fastest pace since the early 1970s as the promise of low-cost reliable supplies has spurred investments by end users.

The report was produced by the CoBank Knowledge Exchange Division, a knowledge-sharing practice that provides strategic insights regarding the key industries served by CoBank, a cooperative bank that provides loans and financial services across the United States.

A portion of the natural gas exported from the U.S. will be sent through pipelines to Mexico. But most of the natural gas will be liquefied and loaded onto tanker ships destined for overseas markets in Europe and Asia. The construction of a liquefied natural gas facility in Oregon is seen as a way to sell natural gas produced in Western Colorado on a global market.

The report projects the U.S. will become a net exporter of natural gas within two years even as the country becomes a major supplier to global energy markets.

“It’s definitely a game changer for the global gas markets,” said Taylor Gunn, author of the report.

Increasingly larger supplies of natural gas have been produced since 2008 thanks to advancements in hydraulic fracturing and horizontal drilling. Dry natural gas production is projected to increase 29 percent over the next five years to keep pace with growing demand, the report states.

Even with growing demand, natural gas prices are expected to remain little changed from their current low levels — remaining below $5 per million British thermal units over the next five years.