Executive summary
The North American gas landscape has changed substantially over the past decade, and the next 15 years will be no different. Looking ahead, we expect to see the role of natural gas shift as the number of coal retirements increases and renewables become a larger part of the energy mix. Debottlenecking and capacity additions that are currently or soon to be in progress will lead Appalachia to take a much larger role in supply, though associated gas from the Permian Basin will remain a substantial—and low-cost—supply source for much of the US Gulf Coast.
Gas demand to 2030 expected to grow modestly
Demand for North American gas is particularly dependent on the global market, namely liquefied-natural-gas (LNG) exports. Roughly 60 percent of demand growth for natural gas will come from US and Canadian LNG exports, which we project will reach approximately 20 billion cubic feet per day by 2030. Coal retirements will also benefit natural-gas demand, but we expect to see this trend hold only for the near term. By 2025, demand for renewables will begin to infringe on demand for natural gas—though gas demand will still grow at a modest rate of about 2 percent per annum.
Monitor North American unconventionals activity from space
Gas supply to 2030 dominated by Appalachia and the Permian Basin
Ongoing debottlenecking and capacity additions will cause shifting supply flows to 2035. After building out its midstream capacity in the mid-2020s, Appalachia will be able to increase production and ultimately supply 40 percent of the North American market— displacing the Western Canadian Sedimentary Basin and Rockies in the Midwest and serving the southern Mid-Atlantic—by 2030. However, ongoing associated gas production and ample supply in the Permian Basin will limit Appalachian flows south; the Permian Basin is expected to remain the primary supply source for the US Gulf Coast.
Price decline not likely to affect North American ability to meet demand
Based on these anticipated supply and demand drivers, we expect to see North American gas prices remain stable in the medium term. However, as supply from shale resources, particularly from associated gas, continues to grow, prices should decline slightly, to roughly $2.50 per million British thermal units, and remain at that point for the long term. At these prices, we anticipate that North America will be able to meet 25-plus years of demand.