Interest In U.S. Shale Gas Has Collapsed, But Here's Why It's Set To Come Back

natural gas

Deal activity in the North American shale gas space has collapsed, even as the industry’s future as a source of cheap energy remains on track.

While $33.2 billion of deals were made during the first half of 2010, just $5.8 billion happened in the third quarter according to Rigzone, and it was mostly in Canada. The U.S. has been dead.

The sudden lack of interest might have something to do with the fact that natural gas prices have fallen to year-to-date lows.

So the thrill is gone, for now, but while demand for acquisitions from energy companies may have collapsed, low natural gas prices could force a raft of consolidation in the U.S., since shale gas remains a fragmented industry of smaller independent companies says Rigzone.

Thus the deal activity should be back, either via rising natural gas prices that tempt major energy companies to get in on the action or weak natural gas prices which push small players into arms of the majors.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.