The first few weeks of the new year are an excellent time to reflect on what happened in 2016, and that reflection is greatly helped by collated data from organizations like the Energy Information Administration (EIA), which has been rolling out year-end reviews—like this report on falling wholesale electricity prices—all month long. The latest report is one of the more impressive—according to the EIA, last year natural gas prices hit their lowest level since 1999:
Natural gas spot prices in 2016 averaged $2.49 per million British thermal units (MMBtu) at the national benchmark Henry Hub, the lowest annual average price since 1999. The monthly average price fell below $2.00/MMBtu from February through May, but later increased, ending the year at an average of $3.58/MMBtu in December. Warmer-than-normal temperatures for most of the year and changing natural gas demand were the main drivers of natural gas prices in 2016.
As the EIA is careful to note, part of this historic low comes to us courtesy of the fact that temperatures in 2016 were warmer than average, necessitating less consumption of natural gas to heat American homes. But the biggest driver by far comes on the supply side of the equation, where booming production from U.S. shale producers provided consumers with a glut of natural gas at bargain basement prices.
But price wasn’t the only milestone shale gas made last year. The EIA continues:
In November 2016, the United States became a net exporter of natural gas on a monthly basis for the first time since 1957, based on data from PointLogic. This was supported by infrastructure improvements—including natural gas pipelines and facilities for liquefying natural gas for export—that enabled suppliers to meet increasing demand from foreign markets.
Our first-ever cargoes of LNG exports left for Brazil in February, and slowly but surely that export industry is starting to get off the ground. This is a remarkable achievement when you consider that a dozen years ago we were busy constructing LNG import terminals. Those problems of scarcity have been replaced by those of abundance, as producers are busy working on ways to get more of their product to market—whether that’s here in the United States, or abroad. The fact that two months ago marked the first time the U.S. was a net exporter of natural gas in almost 60 years is yet another feather in the cap of our fracking industry.