WASHINGTON–The North American natural gas industry is in the midst of profound transformation. The successful development of the Barnett Shale has spurred a succession of shale gas plays, beginning with the Woodford and Fayetteville, and then expanding to the Haynesville, Marcellus, Horn River and Eagle Ford–many of which are more prolific than the Barnett and also have significantly lower cost structures in core areas.
Production from shale is growing explosively, and already is having a major impact on prices. This unprecedented growth from formations that still are at an early stage of development has far-reaching implications for the long-term forward delivery price curve for natural gas and the allocation of capital among other supply sources, and requires every company in the industry to rethink its strategic plans–from industry giants to smaller independents. It already has caused major international players to start pouring funds into the United States and could result in permanent changes in the composition of the industry.
The U.S. Energy Information Administration’s revised monthly production data released April 29 drive home the pivotal impact shale is having on the market. EIA’s report applied a revised methodology for estimating gross withdrawals. EIA used this methodology to report production for February 2010 (the most recent month covered by the report) and adjusted its previous estimates from January 2009 using the same methods.
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