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US Natural Gas Market

US Natural Gas Market Size, Share and Growth Forecast by Type (Ethane, Propane, Methane, Others), by Source (Conventional, Unconventional), by End Use (Residential, Commercial, Electric Power, Industrial, Others), and by Region for 2024-2031

PMR Forecasts a Moderate Outlook for the US Natural Gas Market Based on Innovations in the Natural Gas Sector, and Energy Security Concerns and Sanctions on Energy

Market Size and Share Analysis (2024 -2031)

The US natural gas market is estimated to value at US$569.3 Mn by the end of 2031 from US$458.9 Mn recorded in 2024. The market is expected to secure a CAGR of 3.1% in the forthcoming years from 2024 to 2031.

Market Attributes

Key Insights

US Natural Gas Market Size (2024E)

US$458.9 Mn

Projected Market Value (2031F)

US$569.3 Mn

Projected Growth Rate (CAGR 2024 to 2031)

3.1%

Historical Growth Rate (CAGR 2019 to 2023)

0.9%

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Market Introduction and Trend Analysis

The US natural gas market is a critical component of the nation's energy landscape, characterized by its vast domestic reserves, advanced extraction technologies, and pivotal role in the energy transition. Policy and regulatory changes are also shaping the market, with increasing emphasis on reducing methane emissions, thereby enhancing environmental sustainability.

As one of the world's largest producers and consumers of natural gas, the US has leveraged its abundant shale resources to achieve unprecedented levels of production. Innovations in hydraulic fracturing and horizontal drilling have unlocked significant quantities of natural gas, propelling the country to the forefront of the global energy market.

The integration of natural gas with renewable energy sources in increasing with an aim to enhance grid reliability, and reduce emissions. The adoption of advanced analytics and digital technologies, such as the Internet of Things (IoT), and artificial intelligence (AI) is optimizing gas field operations and improving supply chain efficiency.

According to IEA, the natural gas consumption in North America increased by over 1% (more than 10 bcm) in 2023, primarily due to higher gas usage in the power sector. In the United States, domestic natural gas production surged by 4% (40 bcm), reaching a record high of 1,065 bcm.

This significant supply growth, coupled with mild winter weather, exerted downward pressure on gas prices, causing them to plummet by 60% compared to 2022. The lower gas prices facilitated further coal-to-gas switching in the power sector, boosting the share of natural gas in the US power mix to a record 42% in 2023.

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Historical Growth and Course Ahead

US natural gas production saw substantial increases, with shale gas and associated gas from tight oil formations being significant contributors. Despite a dip during the COVID-19 pandemic, production levels rebounded by early 2023 and continued to grow?. Technological improvements in hydraulic fracturing and horizontal drilling played a crucial role in enhancing extraction efficiency and output.

While domestic natural gas consumption remained relatively stable, there was a significant increase in international demand for US liquefied natural gas (LNG). This demand, coupled with relatively stable domestic consumption, positioned the US as a net exporter of natural gas throughout the period?.

The US natural gas market was also shaped by broader energy trends, such as the increased electrification of various sectors and the shift towards renewable energy sources. Despite these shifts, natural gas continued to play a crucial role in heating and power generation due to its reliability and lower carbon emissions compared to coal?.

Key Trends and Innovations in the Market

  • Shift towards decarbonization
  • Development of green hydrogen
  • Expansion of LNG terminals and transportation networks
  • Integration with renewable energy
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Market Growth Drivers

Growing Environmental Concerns and Sustainability

Environmental considerations are increasingly influencing natural gas market dynamics. The industry is investing in technologies to reduce methane emissions and improve environmental performance. For example, advancements in methane detection and mitigation technologies are helping to address concerns about fugitive methane emissions from natural gas operations.

One significant factor is the lower carbon intensity of natural gas compared to other fossil fuels such as coal and oil. As policymakers and industries seek to reduce greenhouse gas emissions and transition towards cleaner energy sources, natural gas has emerged as a preferred alternative for electricity generation and heating, particularly in sectors where renewable energy sources not yet be fully scalable or cost-effective.

In 2023, the US reinforced its status as the global leader in renewable natural gas (RNG) production, equivalent to biomethane in North America. Biomethane output surged by approximately 10%, totaling nearly 2.2 Bn cubic meters (bcm).

Consequently, the US contributed around 20% of the overall increase in biomethane production for the year. This substantial growth primarily stemmed from the transportation sector and the influence of the Environmental Protection Agency's Renewable Fuel Standard (RFS)s.

Lower Natural Gas Prices Drive the Switch from Coal

Lower natural gas prices have catalysed a monumental shift in the energy landscape, driving a significant transition away from coal and igniting heightened demand for natural gas in the US. This transformation stems from the comparative economic advantage of natural gas over coal, largely attributed to advancements in extraction technologies such as hydraulic fracturing.

As natural gas becomes more abundant and cheaper to produce, it presents a compelling alternative to coal for power generation and other industrial applications. This shift was primarily driven by the cost advantage of natural gas, with prices remaining favorable due to abundant domestic production facilitated by technologies like hydraulic fracturing.

Additionally, the US shale gas revolution, which began around the early 2000s, has substantially increased the country's natural gas reserves, further supporting its affordability and accessibility.

From the initial seven months of 2022 to the corresponding period in 2023, the average utilization of coal-fired generation in the United States decreased notably, dropping from 48.5% to 39.8%. Concurrently, the capacity factor of gas-fired generation experienced an uptick, rising from 54.6% to 57.7% during the same timeframe.

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Factors Impeding the Market Growth

Regulatory Constraints

The US natural gas market, long touted for its abundance and flexibility, faces a formidable obstacle in the form of regulatory constraints. These constraints, often implemented in the name of safety and environmental protection, inadvertently stifle market growth and innovation. One such example is the approval process for new pipeline construction, which has become increasingly arduous in recent years.

According to the Interstate Natural Gas Association of America, the average time to obtain a permit for a new pipeline has doubled over the past decade, reaching an average of five years. This delay not only hampers the expansion of infrastructure but also exacerbates supply bottlenecks, leading to price volatility and reliability concerns.

In recent times, various local administrations have enacted limitations or complete prohibitions on the utilization of natural gas in residential and certain commercial structures, primarily impacting new developments while grandfathering existing ones. These measures stem from a commitment to support local government environmental policies, aimed at curbing greenhouse gas (GHG) emissions and enhancing public health.

Future Opportunities for Natural Gas Companies in the US

Shift Towards Cleaner Energy

Natural gas, often hailed as a cleaner alternative to coal and oil, is poised to play a pivotal role in reducing carbon emissions while meeting growing energy demand. With its lower carbon intensity and greater flexibility, natural gas offers a pathway towards achieving climate goals without sacrificing energy security or affordability.

The versatility of natural gas extends beyond power generation to other sectors such as transportation and industry. The emergence of renewable natural gas (RNG), produced from organic waste sources such as landfills and agricultural residues, offers a sustainable alternative to traditional natural gas. RNG used to fuel vehicles, heat buildings, and power industrial processes, thereby reducing greenhouse gas emissions and promoting circular economy principles.

According to the US Energy Information Administration (EIA), natural gas accounted for about 40% of electricity generation in the US in 2022, surpassing coal as the leading source of power. This shift has been driven by factors such as the declining cost of natural gas, advances in combined-cycle gas turbine technology, and environmental regulations aimed at reducing emissions.

Continued Investments in Infrastructure

Increasing the capacity and efficiency of the natural gas supply chain, these investments ensure that the industry meet rising domestic and global demand while maintaining reliability and reducing costs.

Improved infrastructure, including pipelines, storage facilities, and liquefied natural gas (LNG) terminals, is vital for the seamless transportation and distribution of natural gas, thereby strengthening the market's competitive edge.

For example, the expansion of LNG export terminals along the Gulf Coast has positioned the US as a leading global LNG supplier. According to the US Energy Information Administration (EIA), US LNG exports reached a record high of 11.9 Bn cubic feet per day in 2023.

This surge is attributable to substantial investments in LNG infrastructure, such as the Sabine Pass and Corpus Christi terminals, which have enabled US producers to access high-demand markets in Asia, and Europe. These investments not only boost export capacity but also create jobs and stimulate economic growth in local communities.

Category-wise Analysis

Category

Projected CAGR through 2031

Type - Propane

2.7%

Source - Unconventional

3.8%

End Use - Industrial

4.2%

Methane Segment to Account for the Significant Share

The methane segment accounted for the significant market share of about 78.3% in 2023 and is likely to maintain its dominance during in the forthcoming years recording a CAGR of 3.9%. the US has vast reserves of natural gas, and a significant portion of these reserves consist of methane.

For example, shale gas formations, such as the Marcellus Shale in Pennsylvania and the Barnett Shale in Texas, contain abundant reserves of methane. The development of hydraulic fracturing (fracking) technology in the past few decades have allowed for the extraction of methane from these shale formations, contributing to the significant increase in US natural gas production.

Methane's versatility and wide range of applications contribute to its prominence. It is used extensively for electricity generation, heating, and industrial processes in the US For instance, methane-fired power plants generate a significant portion of the nation's electricity, serving as a reliable and relatively cleaner alternative to coal-fired plants.

Additionally, methane is used as a feedstock in the petrochemical industry for the production of various chemicals and plastics, further driving its demand.

Industrial Sector to Grow Notably for Natural Gas

Natural gas is increasingly favored as a primary energy source for industrial processes due to its cost-effectiveness and relatively low environmental impact compared to traditional fuels like coal or oil. This trend is further fueled by advancements in extraction technologies, which have significantly increased domestic natural gas production and lowered prices.

With the abundance of low-cost natural gas feedstock, petrochemical companies are expanding their operations in the US to take advantage of this competitive advantage.

In 2022, approximately 32% of the total natural gas consumption in the United States was attributed to the industrial sector.

Additionally, natural gas served as the energy source for roughly 41% of the end-use energy consumption within the US industrial sector during the same period. Industrial sector estimated to expand at a CAGR of 4.2% in terms of value in the forthcoming years.

Competitive Landscape for the Natural Gas Market

Forming strategic partnerships and pursuing acquisitions are strategies adopted by vendors to enhance market reach and capabilities. Collaborations between natural gas producers, pipeline operators, and technology providers lead to integrated solutions and greater market penetration.

With increasing emphasis on sustainability, some vendors differentiate themselves by offering natural gas that is sourced or produced in an environmentally friendly manner. This involves investing in renewable natural gas (RNG) production, or offsetting carbon emissions associated with natural gas production and distribution.

Top Industry Players Profiled

  • ExxonMobil Corporation
  • Chevron Corporation
  • ConocoPhillips
  • EOG Resources, Inc.
  • Occidental Petroleum Corporation
  • Marathon Petroleum Corporation
  • Phillips 66
  • Hess Corporation
  • Cheniere Energy
  • Anadarko Petroleum Corporation
  • Devon Energy Corporation
  • Pioneer Natural Resources
  • Southwestern Energy
  • TotalEnergies SE

Recent Developments in the Natural Gas Market

August 2023

Cummins Inc. and Chevron Inc. have signed a memorandum of understanding to leverage their complementary strengths in hydrogen, natural gas, and other lower-carbon fuel value chains. Building on their existing strategic collaboration on hydrogen and renewable natural gas, the agreement now includes other liquid renewable fuels such as renewable gasoline blends, biodiesel, and renewable diesel. This partnership aims to promote commercial and industrial adoption of these fuels in North America.

November 2022

Sempra announced that its subsidiary, Sempra Infrastructure, has signed a 20-year Sale and Purchase Agreement (SPA) with ConocoPhillips for 5 million tonnes per annum (Mtpa) of liquefied natural gas (LNG) from Phase 1 of the Port Arthur LNG project in Jefferson County, Texas. Additionally, ConocoPhillips will acquire a 30% equity stake in Phase 1 through an equity sale and purchase agreement and will manage the feedgas supply for the proposed liquefaction facility.

In March 2023

Marathon Petroleum Corp. announced the acquisition of a 49.9% stake in LF Bioenergy, a growing renewable natural gas (RNG) producer in the US, from Cresta Fund Management for $50 million. The agreement also includes the possibility of up to an additional $50 million based on achieving specific earn-out targets. LF Bioenergy is focused on developing a portfolio of low carbon intensity RNG projects based on dairy farms.

US Natural Gas Market - Report Scope & Segmentation

Attributes

Details

Forecast Period

2024 to 2031

Historical Data Available for

2018 to 2023

Market Analysis

US$ Bn for Value

Key Countries Covered

  • United States

Key Market Segments Covered

  • Type
  • Source
  • End Use
  • Region

Key Companies Profiled in the Report

  • ExxonMobil Corporation
  • Chevron Corporation
  • ConocoPhillips
  • EOG Resources, Inc.
  • Occidental Petroleum Corporation
  • Marathon Petroleum Corporation
  • Phillips 66
  • Hess Corporation
  • Cheniere Energy
  • Anadarko Petroleum Corporation
  • Devon Energy Corporation
  • Pioneer Natural Resources
  • Southwestern Energy
  • TotalEnergies SE

Report Coverage

  • Market Forecast and Trends
  • Company Share Analysis
  • Competitive Intelligence
  • DROT Analysis
  • Market Dynamics and Challenges
  • Strategic Growth Initiatives  

Customization & Pricing

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US Natural Gas Market Segmentation

By Type

  • Ethane
  • Propane
  • Methane
  • Others

By Source

  • Conventional 
  • Unconventional

By End Use

  • Residential
  • Commercial
  • Electric Power
  • Industrial
  • Others

By Country

  • United States

- Companies Covered in This Report -

- Frequently Asked Questions -

Growing demand from Industries such as chemicals, fertilizers, and manufacturing heavily rely on natural gas as both a feedstock and an energy source is surging the demand.

Some of the key players operating in the market ExxonMobil Corporation, Chevron Corporation, ConocoPhillips, EOG Resources, Inc., and Occidental Petroleum Corporation.

The methane segment recorded the significant market share.

LNG export infrastructure expansion are estimated to present opportunities for the market players.

North America to account for the significant share in the market.

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