Texas Natural Gas Production Continued Four-Month Slide in January

By Jacob Dick  April 11, 2023 www.naturalgasintel.com

Texas natural gas production in January dropped to the lowest point since February 2021 as both well production and associated gas from oil wells in the Permian Basin counties shrank, according to preliminary data from the Railroad Commission of Texas (RRC).

The state’s gas production during January was estimated at 845 Bcf, or 27 Bcf/d, regulators said in the most recent report. Gas production was 952 Bcf in January 2021.

January’s recorded gas volumes marked a four-month slide for Texas production, aligning with a similar drop in crude oil and condensate. Producers, particularly Permian-focused companies, have been signaling production cuts as gas prices plummet and oilfield costs continue to tick upward.

The state’s top three gas producing counties were in the Permian, RRC noted. Reeves County led, with production of 76 Bcf, followed by Webb at 70 Bcf and Midland at 60 Bcf.

Only two counties outside of the Permian, Panola (50 Bcf) and Harrison (37 Bcf), made RRC’s list of top 10 production areas. Both are in the East Texas portion of the Haynesville Shale.

Annual natural gas production in Texas last year marked a six-year high. RRC recorded combined production at 11,445 Bcf, up from 10,802 Bcf from 2021.

The state’s gas and oil production could continue to drop throughout the rest of the year as firms in the prolific Permian report growing anxiety over commodity prices and inflationary headwinds. Last month, energy executives told the Federal Reserve Bank of Dallas, aka Dallas Fed, that production activity plateaued during the first three months of the year as companies moved to pare down costs amid shrinking break-even margins.

Respondents to the quarterly Dallas Fed survey predicted that Henry Hub natural gas prices would average $3.43/MMBtu by year’s end. West Texas Intermediate (WTI) oil prices are predicted to average $80/bbl. Prices during the survey collection period averaged $2.23 natural gas and $68.51 WTI.

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