Friday, January 6, 2012

EIA 2010 Natural Gas Annual

Last week, the EIA released its 2010 EIA Natural Gas Annual report.  It's a compendium of facts and figures related to the natural gas industry presented in a blizzard of numbers.  While I like numbers, I'm really more of a visual person, so a picture really is worth a thousand words (or numbers) for me.  In reviewing the report, there are two figures that tell the current story of natural gas to me.

The first is a visual representation of the flow of gas quantities, from production and imports to processing, storage and end users.  It's a great overview of the industry.  Focusing on end users, it shows that electrical production and industrial customers make up 58% of all gas consumed in the U.S. Both are very especially sensitive to the economy and will remain key demand drivers for gas, especially as coal-fired power plants are eliminated.  But the illustration also shows huge growth opportunities in exports and vehicle fuel.

The second graphic answers the question, "if prices are so low, why are they still producing more gas?"  Well, in 2010, the number of wells decreased by 1%, but the total production increased by about 3.5%.  Fewer wells making more gas.  Expect that trend to continue.

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