U.S. gas production forecast to bottom out in November
Paul Takahashi May 19, 2020 houstonchronicle.com
U.S. gas production is expected to bottom out in November as energy companies shut down rigs in response to the coronavirus-driven oil bust.
Rystad Energy, a Norwegian energy research firm, estimates that U.S. gas production will reach its nadir in November at 82.5 billion cubic feet per day, down from 94 billion cubic feet per day in November 2019. Most of the 11.5 billion cubic feet per day reduction will occur because of the natural declining life of oil and gas wells, but about 15 percent can be attributed to well shutdowns.
“As many oil-focused producers implement significant production curtailments, one might think that this loss will also start to affect associated gas production soon,” Artem Abramov, Rystad’s head of shale research, said in a statement. “Still, associated gas production is not declining as quickly as the market had hoped for so far. “
Already, April production has fallen to 88.9 billion cubic feet per day and May output is expected to be about 86 billion cubic feet per day. Rystad expects a slow recovery, adding around 1 billion cubic feet per day of production by mid-2021 and another 1 billion cubic feet per day by the end of 2021.
Rystad’s forecast is based on the U.S. benchmark crude oil price around $35 per barrel. Oil was trading around $32 per barrel on Tuesday morning.