Getting the Gas | The Perryman Group

Getting the Gas

By: Dr. M. Ray Perryman
Published in syndication February 01, 2023

On December 23, the quantity of natural gas used in the United States set a new daily record. Consumption in the lower 48 states that day was 141.0 billion cubic feet (Bcf), according to estimates reported by the US Energy Information Administration (EIA). The previous record was 137.4 Bcf, set on January 1, 2018.

A winter storm swept across the United States from December 21 through December 26, 2022, with blizzards, high winds, and extreme cold. Increased demand for heat was largely met (directly or indirectly) by natural gas. During that time, residential and commercial sector natural gas consumption averaged 55% higher than the previous five-year average, and natural gas consumption in the electric power sector was 45% higher than the five-year average. Although electric power generation from renewable energy has grown substantially of late, natural gas remains the primary fuel.

Even as demand increased, production fell. Weather-related issues led to a 16% drop in production, the worst decline since Winter Storm Uri in February 2021. Fortunately, a relatively mild September and October and production growth allowed for refilling of underground natural gas storage, which had been relatively low due to the hot summer. Withdrawals from storage met most of the increased demand, with pipeline imports from Canada comprising the rest. In fact, Canada supplied 10.4 Bcf of natural gas to the United States on December 24, the largest daily import level in nearly 16 years.

The EIA also recently reported that, on an annual basis, natural gas consumption, production, and exports broke records in 2022. Estimated average daily consumption in 2022 was 88.7 Bcf per day, up 8% over 2021. Production increases were led by the Permian Basin and Haynesville regions.

Another source of demand for natural gas is liquified natural gas (LNG) facilities (about 12.5 Bcf per day). Located primarily along the Gulf Coast of Texas and Louisiana, these plants convert natural gas into a form which can be shipped to foreign markets. LNG usage is developing rapidly, with many nations in Europe and elsewhere investing in the infrastructure needed to regassify it for use in their pipeline networks. The Russia-Ukraine war has made the need for natural gas supplies from allies such as the United States abundantly clear, and our ability to supply LNG helps stabilize global markets, economies, and politics.

The bottom line is that natural gas is an essential fuel and will remain so for the foreseeable future, as confirmed by every forecast from the EIA and many other sources. Developing natural gas resources and delivery capacity in responsible ways can facilitate our efforts to maintain energy security and sufficiency while both pursuing climate-related objectives and enhancing geopolitical security. This is not rocket science. Stay safe!