Is A Production Decline in Natural Gas at hand?
I read an online article this morning regarding the future of Encana. The writer of the article quoted an article from the Ft. Worth Star Telegram which stated that the EIA has forecast an immediate decline in natural gas production from the largest shale plays in the United States. The writer further claimed that an increase in demand for natural gas along with a decline in production would have a positive impact on price. What good news that would be for me! However,I have looked at the EIA forecast (albeit with old eyes) and I see the EIA forecasting a production increase rather than a decline. I often find myself in error as I try to read and understand various charts and language tortured to avoid reactivity and possible litigation so I may well be wrong. Has anyone noted an EIA forecast of a production decline in natural gas? Thank you for any help you might provide.
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Permalink Reply by Skip Peel - Mineral Consultant on -
Natural gas futures are trending upward. The next monthly NG contract settlement price could bolster the case for prices improving slightly. The problem with forecasting production decline is the fraclog. The backlog of drilled but not completed wells. There are over 8,000 of them the last count I saw. As prices improve companies can complete those wells and turn them to sales in short order. Once the price rises to the point required by the operators a new wave of production will impact the price. It's difficult if not impossible to know how that may play out but it makes fodder for reporters who need something to write about.
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