U.S. natural gas production levels have continued to climb even as natural gas prices have continued to fall.
U.S. natural gas production levels have continued to climb even as natural gas prices have continued to fall. Historically, a decline in prices has prompted a reduction in production. However, this correlation is currently broken.
According to the February 29, 2012, Energy Information Administration (EIA) Monthly Natural Gas Gross Production Report, production levels in the Lower 48 states showed a slight decrease in December of 0.14 Bcf/d, or 0.2 percent. However, this is largely explained by a compressor station fire in Wyoming that contributed to a decline of 0.23Bcf/d, or 4.4 percent. In contrast, Other States, which includes the massive Marcellus Shale play in the Appalachians, posted an increase of 0.40 Bcf/d, or 1.9 percent. And in addition, Oklahoma displayed a gain of 0.05 Bcf/d, or 0.9 percent, as several new wells came online in the Woodford shale play.
Production growth is expected to continue into 2013. In its February 7, 2012, Short-Term Energy Outlook, the EIA projects that year-over-year 2012 marketed natural gas production will climb on average 1.49 Bcf/day and 2013 marketed natural gas production will rise on average by another 0.88 Bcf/day. These estimates for production growth easily offset any potential increases in natural gas demand.
Valerie Wood, President of Energy Solutions, Inc., and publisher of Natural Gas Price Outlook, advised that “in the past year, production levels in the Lower 48 states have risen by nine percent. However, most of the growth has come from two regions. In Louisiana, natural gas production has risen by 30 percent in the past year, primarily because of the Haynesville shale play, and in the Appalachians, home of the Marcellus Shale basin, natural gas production has risen by around 20 percent.”
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Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.