The shale revolution which started 15 years ago has helped make the U.S. the world’s leading producer of natural gas. The fossil fuel is used for heating and to produce electricity, among other things.
But there are some signs that a slowdown might be on the horizon. To get an idea of what energy producers are thinking right now, one place to look is what’s known as “the forward curve,” said Jacques Rousseau of ClearView Energy Partners.
“There are companies that are willing to buy or sell oil or gas in the future at a certain price,” he said. “If you’re a producer, you’re saying, ‘Well, what can I sell my gas for?’”
A year ago, sellers could get $8 per unit, but prices have dropped to around $2.33 for natural gas to be delivered next month. And the projected price isn’t set to crack $4 until December of next year.
“They’re deciding to lay down some rigs and to produce less,” Rousseau said…
…But the U.S. shale revolution is far from over. Ryan Kellogg of the University of Chicago said with the exception of the early pandemic, “natural gas production has really done nothing but grow. We’re setting production records pretty much every year.”
And he said that doesn’t seem set to change soon.