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Natural gas explained Where our natural gas comes from

The United States now produces nearly all of the natural gas that it uses

U.S. natural gas production in 2018 was about 30.6 trillion cubic feet (Tcf), the highest annual amount recorded. Most of the production increases since 2005 are the result of horizontal drilling and hydraulic fracturing techniques, notably in shale, sandstone, carbonate, and other tight geologic formations. Natural gas is produced from onshore and offshore natural gas and oil wells and from coal beds. In 2018, U.S. dry natural gas production was about 2% greater than U.S. total natural gas consumption.

Five states accounted for about 68% of total U.S. dry natural gas production in 2018.

  • The top five natural gas-producing states and their share of total U.S. natural gas production in 2018
  • Texas22%
  • Pennsylvania20%
  • Oklahoma9%
  • Louisiana9%
  • Ohio8%

About 3% of U.S. dry natural gas was produced offshore in the Federal Gulf of Mexico in 2018.

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What is shale?

Shale is a fine-grained sedimentary rock that forms when silt and clay-size mineral particles are compacted, and it is easily broken into thin, parallel layers. Black shale contains organic material that can generate oil and natural gas, which is trapped within the rock's pores.

Where are shale gas resources found?

Shale natural gas resources are found in shale formations that contain significant accumulations of natural gas and/or oil. These resources, or plays, are found in about 30 states. The Barnett Shale in Texas has been producing natural gas for more than a decade. Information gained from developing the Barnett Shale provided the initial technology template for developing other shale plays in the United States.

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Shale gas and tight gas

The oil and natural gas industry generally distinguishes between two categories of low-permeability formations that produce natural gas:

  • Shale natural gas
  • Tight natural gas
Schematic Geology of Natural Gas Resources

Source: Adapted from United States Geological Survey factsheet 0113-01 (public domain)

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Schematic Geology of Natural Gas Resources

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Shale natural gas

Large-scale natural gas production from shale began around 2000, when shale gas production became a commercial reality in the Barnett Shale located in north-central Texas. The production of Barnett Shale natural gas was pioneered by the Mitchell Energy and Development Corporation. During the 1980s and 1990s, Mitchell Energy experimented with alternative methods of hydraulically fracturing the Barnett Shale. By 2000, the company had developed a hydraulic fracturing technique that produced commercial volumes of shale gas. As the commercial success of the Barnett Shale became apparent, other companies started drilling wells in this formation, and by 2005, the Barnett Shale was producing almost half a trillion cubic feet (Tcf) of natural gas per year. As natural gas producers gained confidence in their abilities to profitably produce natural gas in the Barnett Shale and saw confirmed results in the Fayetteville Shale in northern Arkansas, producers started developing other shale formations. These new formations included the Haynesville in eastern Texas and north Louisiana, the Woodford in Oklahoma, the Eagle Ford in southern Texas, and the Marcellus and Utica shales in northern Appalachia.

Chart of Monthly Dry Shale Gas Production

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Tight natural gas

Tight natural gas was first identified as a separate category of natural gas production with the passage of the Natural Gas Policy Act of 1978 (NGPA). The NGPA established tight natural gas as a separate wellhead natural gas pricing category that could obtain unregulated market-determined prices. The tight natural gas category gave producers an incentive to produce high-cost natural gas resources when U.S. natural gas resources were believed to be increasingly scarce.

As a result of the NGPA tight natural gas price incentive, these resources have been in production since the early 1980s, primarily from low-permeability sandstones and carbonate formations and from a small production volume of eastern Devonian shale. With the full deregulation of wellhead natural gas prices and the repeal of the associated Federal Energy Regulatory Commission (FERC) regulations, tight natural gas no longer has a specific definition, but it generically still refers to natural gas produced from low-permeability sandstone and carbonate reservoirs.

Notable tight natural gas formations include, but are not confined to

  • Clinton, Medina, and Tuscarora formations in Appalachia
  • Berea sandstone in Michigan
  • Bossier, Cotton Valley, Olmos, Vicksburg, and Wilcox Lobo along the Gulf Coast
  • Granite Wash and Atoka formations in the Midcontinent
  • Canyon formation in the Permian Basin
  • Mesaverde and Niobrara formations in multiple Rocky Mountain basins

The United States has abundant natural gas resources

The United States has access to significant natural gas resources. In U.S. Crude Oil and Natural Gas Proved Reserves Year-End 2018, the U.S. Energy Information Administration estimates that the United States has about 464 Tcf of proved wet natural gas resources, which includes about 308 Tcf of shale gas resources and about 438 trillion cubic feet of dry natural gas. In the Assumptions for the Oil and Gas Supply Module of the National Energy Modeling System used to generate the projections in the Annual Energy Outlook 2019, EIA estimates that the U.S. has about 2,137 Tcf of unproved dry natural gas resources.

Offshore natural gas production

Although most of the natural gas and oil wells in the United States are on land, some wells are drilled into the ocean floor in waters off the coast of the United States. Most of U.S. offshore natural gas production occurs in federal waters in the Gulf of Mexico, the source of about 3% of U.S. dry natural gas production in 2018.

Coalbed methane and supplemental gaseous fuels

Coalbed methane, which is methane obtained from coal seams, or beds, is a source of methane that is added to the U.S. natural gas supply. In 2018, U.S. coalbed methane production was equal to about 3% of total U.S. dry natural gas production.

Additional sources of hydrocarbon gases that are included in U.S. natural gas production and consumption are supplemental gaseous fuels, which include blast furnace gas, refinery gas, biomass gas, propane-air mixtures, and synthetic natural gas (natural gas made from petroleum hydrocarbons or from coal). These supplemental gaseous fuels were equal to about 0.2% of U.S. natural gas consumption in 2018. The largest source of synthetic natural gas is the Great Plains Synfuels Plant in Beulah, North Dakota, where coal is converted to pipeline-quality natural gas.

Last updated: November 13, 2019