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McKinsey Energy Insights: Marcellus, Utica and Permian will supply 55% of North American gas market by 2030

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Oilfield Technology,

McKinsey Energy Insights (MEI), the data and analytics specialist that provides distinctive insight to the global energy industry, forecasts that the Marcellus, Utica, and Permian shale plays will supply 55% of the North American gas market by 2030. The findings are reported in MEI’s latest North America Gas Outlook to 2030, which explores gas supply and demand projections to 2030.

Yasmine Zhu, Senior Analyst at MEI, comments: “Continued improvements in technology have sustained North American gas production. Improved drilling and completions technology have led to enhanced recovery rates and efficiency, while innovations in water procurement and disposal are allowing operators to realise where additional savings can be made. We anticipate that further technical breakthroughs will continue to boost shale gas production and drive down costs, particularly over the next 2 - 5 years in marginal plays like the Haynesville.”

Operators are also expected to target secondary plays from existing wells. These developments have substantially lowered breakeven costs, and MEI estimates that approximately 650 trillion ft3 of gas – enough to meet over 25 years of North American demand – has a breakeven point below US$2.8 million Btu. Should recovering oil prices drive a boom in drilling, increasing oilfield services costs could influence the breakeven price.

By 2030, MEI expects that the Marcellus, Utica, and Permian shale plays will supply ~55% of the North American market. The Marcellus and Utica currently account for 27% of total US and Canadian supply, and MEI projects that percentage will grow to 40% by 2030. Of the anticipated associated gas growth, approximately 60% will come from the Permian, adding 14 billion ft3/d in 2030. However, additional infrastructure will be needed to keep pace with the rapid production growth and enable operators to capitalise on a higher wellhead price for export markets.

The North American Gas Outlook to 2030 was developed by MEI analysts after reviewing forecasting models from MEI’s interconnected suite of products, including the North America Flow Basis Model, which incorporates supply, demand, and pipeline networks to derive flow patterns and market price basis through 2030. The model covers 57 gas pricing nodes and 156 flow paths, with the objective of minimising total transportation cost.

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