US Natural Gas Production Decline Continues (3/29/13)

Total US natural gas production declined for the second month in a row which is likely the direct result of the past decrease in gas rig count. This could also be effected by the typical cold weather impacts on production facilties and bottlenecks in midstream infrastructure so the next few months will clarify the trend.

January's production was down by 0.7 Bcfd (0.8%) to 72.1 Bcfd from December's rate primarily due to decreases in Louisiana <0.3 Bcfd>, Wyoming <0.2 Bcfd> and New Mexico <0.2 Bcfd>.

Total US production was down 0.6 Bcfd (0.8%) on a year-to-year basis. Contributors to the decrease included Louisiana <1.6 Bcfd> (-18.5%), Wyoming <0.9 Bcfd> (-13.8%), GOM <0.6 Bcfd> (-11.9%) and New Mexico <0.4 Bcfd> (-10.6%). Only Other States which includes the Marcellus Shale had a significant increase in production versus January 2012 (+2.9 Bcfd, +13.6%).

I have attached a set of charts that depict the historical production trends.

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Yay!!! Les B is back! 

Thanks for the update.

jf

YAY!  TOO. We have been wondering where you were, Les B. Glad to see you back

 

Les--- Is not 72.1 Bcfd still an increase as compared to about 69 Bcfd avg for 2012. I bet the increase in "other states" graphs is Marcellus Shale states. Thank goodness demand is up in last couple years,

Les, Natural Gas Contract Settlement Price For April - $3.976.  Do you think the price goes up, goes down or stabilizes around this price?

Skip, I am thinking we may see prices above $4 for May but pushed back below $4 by the new Utica Shale volumes until Fall.  Hopefully after that we will have pricing in the $4 to $4.50 range.  

Thanks, Les. Seems there is always a new shale play, or two, that is in the early stages of development where drilling is driven by lease retention.

Skip, basically plays like the Utica Shale, Eagle Ford Shale, etc can survive at very low natural gas prices due to the condensate/oil and NGL revenue.  That is the reason for the limited number of rigs working in the dr gas plays.  It is still unclear what price level is necessary to sustain prduction and/or trigger additional dry gas drilling activity.  

I know you all have said LNG Export will have minimal effect on Demand and prices, but I can not help to think by 2020  the USA will export 10+ Bcfd which is 15% of present production and even if this does not have major effect on prices it will because the USA production increases to 85 Bcfd which has to help with more drilling and to some degree return activity to Dry Gas fields like HA, etc. The Japanese have invested in Barnet and other Nat Gas plays because they need Nat Gas so only way to get it to Japan is via LNG--- What effect this will have on Nat Gas prices I do Not Know , but sure will not hurt it-- Yes there is lots of production World Wide coming on line in near future.Cheniere Energy (AMEX:LNGstock climbed as much as 2.4 percent in pre-market trading on Monday before it simmered down to more modest gains around 1.55 percent by mid-morning. The buzz is that Centrica (CPYYF.PK), a British multinational utility company, has entered into an agreement to purchase 1.75 million metric tons of liquefied natural gas per year for 20 years, with the option for a 10-year extension.

The agreement states that Centrica will purchase the gas at a price indexed to the Henry Hub price plus a fixed component. Centrica will export the gas from the Sabine Pass liquefaction plant in Louisiana. The deal is predicated on Cheniere receiving regulatory approval and financing to compete work on the fifth LNG train at the plant.

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The news, while a significant development for Cheniere, is evidence of North America’s changing role in the global energy market. U.K. Secretary of State for Energy and Climate Change Ed Davey commented about the deal: “Security of UK energy supply lies in diversity so I am pleased that Centrica has announced today that it has secured a long-term North American liquefied natural gas export contract with Cheniere Energy Partners. The UK already receives gas from a range of countries and we can now add the US to Norway, the Netherlands and Qatar as sources of supply” Cheniere has now booked almost all expected LNG Capacity with long term contracts

IMO, just too many assumptions over too long a period of time. The future will bring greater competition for global LNG export.  Japan will get as much if not more of it's LNG from Australia and the Middle East.  F&D and transport costs will shape markets.

Adubu, I should clarify my year-to-year basis is a comparison to January 2012 which was 72.7 Bcfd.  The 2012 average EIA roduction was also higher at 72.6 Bcfd.  Sometimes you will see references to marketed production or US dry production which are slightly lower values due to extraction loss and other reductions from wellhead production.    

Les B---- What effect you think this will have on results to US Production during next few years?-------------------------------------------------------------------------------------------------------------------------------------- News: Planned natural gas pipeline expansions

would add nearly 30 Bcf/d of new capacity through

2016.

According to U.S. Energy Information Administration’s

(EIA) pipeline projects data, nearly 30 billion cubic feet

per day (Bcf/d) of natural gas pipeline capacity in the

United States is in some stage of proposed or planned development

with scheduled completion dates through 2016.

These data are based on the latest information available

from company and Federal Energy Regulatory Commission

(FERC) statements as of December 2012. It includes

both new pipelines, and expansions and lateral extensions

to existing pipelines. It is uncertain whether all currently

planned expansion projects will be completed, although

they are more likely to be constructed the further along

they are in the approval process.

About 39 percent or 11.5 Bcf/d of the planned capacity

projects have received approval from FERC. Currently,

only 10 percent of the planned additions are actively under

construction, with more than half of those located in the

Southwest. Combining all stages of project development,

above 40 percent of all planned pipeline projects are located

in the Northeast, which accounted for over half of all

completed natural gas pipeline projects in 2012. Despite

material gains in pipeline capacity additions and shaledriven

natural gas production in the United States since

2005, the greater New York metropolitan area and especially

New England markets still experience frequent constraints.

Adubu, some of these pipeline projects are necessary to avoid potential bottlenecks as production continues to grow in the Marcellus/Utica Shale region.  Some will also help provide supply to new markets such gas fired power plants and LNG export facilities.

Without the projects we would see potential declines in total US production while their completion will help maintain current levels or maybe some growth in production.  

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