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A shale gas well drilling site in St. Mary’s, Pennsylvania A shale gas well drilling site in St. Mary’s, Pennsylvania, March 12, 2020 (AP photo by Keith Srakocic).

Why U.S. Shale Gas Could Emerge From the Pandemic Stronger Than Ever

Monday, Aug. 17, 2020

The past year has been a perfect storm for America’s shale gas companies, on both the domestic and international fronts. Record-setting levels of American gas production and consumption in 2019 masked the fact that the industry was already under siege, as years of insufficient returns pushed investors away from financing new drilling and exploration. Meanwhile, newly commissioned projects aimed at exporting liquified natural gas, or LNG, faced headwinds on international markets due to a global supply glut. The COVID-19 pandemic exacerbated these issues, as it further depressed domestic and international demand for natural gas.

The collapse in oil prices as a result of the pandemic didn’t help, either. As production of American shale oil declined in response to global price signals, so did the supply of residual natural gas that is found in oil reservoirs, known in the industry as associated gas. The tightening of the domestic gas supply, as well as relatively higher demand, led to a recent increase in Henry Hub prices, which serve as the key U.S. benchmark for natural gas. After bottoming out at around $1.50 per million British thermal units in June, Henry Hub prices have now recovered to around $2.30—about the same level as in August, 2019. ...

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