Two cupped hands holding a ring of natural gas flames.

Image source: Getty Images.

In July 2003, Time ran a story titled "Why U.S. Is Running Out of Gas" that detailed America's growing shortage of natural gas. That shortfall was sending gas prices skyrocketing, causing the country to scramble for solutions. Among the potential answers were turning coal into a synthetic gas and reopening mothballed natural gas import facilities.

However, the energy landscape in America has dramatically changed over the past several years. Advances in energy extraction technology have enabled oil and gas companies to access a vast supply of energy resources that had been locked away in tight rock formations for eons. It is a stunning shift that is having a positive impact in so many ways. 

America has 93 years of gas reserves

According to the latest data from the U.S. Energy Information Administration, America currently has 2,474 trillion cubic feet (Tcf) of technically recoverable natural gas resources. At the nation's current consumption rate of 26.6 Tcf per year, that's enough gas to last the country 93 years.

One of the crucial drivers of the dramatic upward revision of America's natural gas resources is the emergence of the Marcellus and Utica Shale plays underneath the Appalachian region. Leading developers EQT (EQT -1.15%) and Range Resources (RRC -0.53%) have uncovered breathtaking quantities of gas in these fields. In EQT's case, it estimates that there's 78 trillion cubic feet equivalent (Tcfe) of total resource potential underneath its acreage position in Appalachia, which is enough gas to supply the country's entire needs for roughly three years. Meanwhile, Range Resources thinks it has between 54 and 71 Tcfe of resource potential underneath its Appalachia acreage. Those resources will keep drillers busy for decades to come. 

A natural gas drill.

Image source: Getty Images.

Natural gas hit its lowest average price in nearly two decades

The discovery of these remarkable supply sources fueled a natural gas drilling boom in this country, leading producers to unleash a torrent of new gas production. America's shale plays have turned out to be so prolific that the country has had an overabundance of gas in recent years, exacerbated by warmer-than-normal weather the past few winters. These factors pushed natural gas down to its lowest average price since 1999:

Chart showing monthly and annual average natural gas spot prices at Henry Hub, 1997-2016.

Image source: Energy Information Administration.

Natural gas now supplies 34% of the nation's electricity

Natural gas has an interesting history as a power source in this country. The energy crises of the '60s and '70s led Congress to enact the Powerplant and Industrial Fuel Use Act, which banned the use of natural gas to generate electricity by 1990. However, the Regan administration led the repeal of that moratorium in 1987, which fueled a revival in natural gas as a fuel for power plants. While natural gas' share of the electricity market has ebbed and flowed over the years, it recently overtook coal as the country's top electricity generating fuel at 34% versus 30% for coal. Fueling that rise was the combination of low natural gas prices, an increase in natural gas generation capacity, and the continued retirement of coal-fired power plants.

Natural gas will become an even more significant fuel source for the power industry in the years ahead. As the following map shows, several additional natural gas power plants came on in 2016, with more poised to enter service over the next two years:

U.S. map showing natural gas-fired capacity additions, 2016-2018.

Image source: Energy Information Administration.

Energy research firm Wood Mackenzie, meanwhile, sees natural gas demand by the power industry rising 15% by 2025 as the country continues building additional gas-fired plants.

Energy-related carbon emissions are down 12%

The switch from coal to natural gas is having a dramatic impact on the country's greenhouse gas emissions because coal's carbon intensity is 82% higher than natural gas'. Because of this, natural gas power plants produce 37% to 54% fewer emissions than a coal power plant, depending on age and efficiently. As a result, the country's energy-related carbon emissions fell 12% from 2005 to 2015 even as natural gas consumption surged 81%.

In November America became a net exporter of natural gas for the first time since 1957

Most of the natural gas consumed in America comes from domestic sources, though the country does import some gas from Canada while also exporting some as well, with 87% of it going to Mexico. That said, on a net basis, the country imported more than it exported until last November. That is when the country became a net exporter for the first time in nearly 60 years, thanks in part to the start-up of Cheniere Energy's (LNG 1.75%) Sabine Pass export terminal in Louisiana, which was formerly an import facility. The Cheniere Energy plant commissioned its first LNG cargo last February, shipping the gas to Brazil, and has steadily increased its output ever since. Overall, the company is in the process of commissioning three natural gas liquefaction trains with three more under construction and another three under development.

As these and other export facilities ramp up, America will emerge as a major player in the gas export market. According to Wood Mackenzie, the country could export 10.9 billion cubic feet per day (Bcf/d) by 2025 via LNG and another 6.3 Bcf/d to Mexico, which would be nearly 17% of projected domestic production.

Investor takeaway

In a little more than a decade, America went from having a natural gas shortage to an overabundance. That pushed its price down, fueling the rise of new gas power plants and LNG export facilities while driving down greenhouse gas emissions. It is a remarkable transformation that's showing no signs of slowing down.