U.S. Energy
During September 2012, natural gas was selling for $2.50 to $3.00 per thousand cubic feet. Production costs for natural gas have fallen dramatically over the past few years, largely due to advances in directional drilling and hydraulic fracturing. Fracturing is the process of injecting enormous amounts of fluid (90% water, < 10% sand, and < 1% chemical additives) into the ground below the water table.
It is likely that natural gas will provide the cheapest source of energy—projected to be six cents a kilowatt-hour; > 20% cheaper than new coal and nuclear or most renewable alternatives. Exporting natural gas has its own set of economics (per thousand cubic feet): [1] add 15% to the cost due to gas loss during the liquidation process, [2] liquidation costs are between $2.50 and $3.00, [3] shipping ranges from $0.85 to $2.80, depending on whether the liquefied gas is going to Europe or Asia, and [4] converting the liquefied gas back to natural gas costs an additional $0.40.
Historically, the ratio between the cost of natural gas and oil on an energy-equivalent basis has been one to six. Today, that ratio is far higher due to the greatly decreased price for natural gas.
The North Dakota Bakken/Three Rivers field produces 600,000 barrels of oil a day, up from 250,000 barrels in 2008. It is now estimated that the U.S. can economically (selling at $70 a barrel) and technically recover 45 billion barrels of oil, representing 10% of total North America oil in place.