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Annual US natural gas production declines first time in 11 Years – IHS Markit

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US natural gas production

2016 natural gas production ends with first annual decline since start of the shale revolution

The 2016 annual gas production average for the US lower-48 states fell for the first time in 11 years—since the shale revolution began—according to analysis from IHS Markit.

IHS Markit said US natural gas production averaged 72.1 billion cubic feet per day (Bcf/d) in 2016, which reflects a 1.8 per cent (1.3 Bcf/d) decrease from 2015 averages.

“Despite an increase in U.S. drilling rigs operating in the second half of 2016, a rebound in energy prices and improvements in drilling efficiencies, natural gas production in the remainder of the lower-48 combined for a 6.6 percent (3.5 Bcf/d) year-on-year decrease,” said Warren Waite, manager for analytics at PointLogic Energy, a business unit of IHS Markit. PointLogic Energy tracks U.S. production levels on a daily basis across 92 producing areas in the lower-48 states.

Since March 2016, monthly US natural gas production output has lagged the same month of the prior year, which contributed for the first year-on-year annual decline since 2005.

The Northeast region was the only region to measure year-on-year gains, growing 2.2 Bcf/d to average 22.0 Bcf/d in 2016.

Northeast production growth is a result of a similar volumetric build-up of new takeaway capacity on pipelines leaving the Marcellus and Utica shales, IHS Markit said.

“Excluding the Marcellus and Utica in the Northeast, the only other bright spot for gas production growth in 2016 was in the Permian, which added 0.3 Bcf/d of associated natural gas to average 5.6 Bcf/d,” said Waite.

The Permian, in West Texas, is a dynamic oil-driven play with highly attractive drilling economics and multiple geological targets that benefit from horizontal drilling.

From a monthly perspective, Dec. production for the lower-48 states also declined, albeit slightly, averaging nearly 71.3 Bcf/d, which reflects a decrease of 0.6 per cent (0.4 Bcf/d) below the average in Nov.

“Natural gas production in December was hindered by a series of arctic blasts in the week leading up to Christmas, and spurred a short bout of wellhead freeze-offs in the Western, Rocky Mountain, Texas and Midcontinent regions,” Waite said. “Production output has since recovered.”

Northeast natural gas production gained 0.25 Bcf/d to 22.5 Bcf/d in Dec. “The monthly production increase is a result of incremental localized demand met by trapped supply in the Appalachia, plus the partial in-service of Tallgrass’s Rockies Express Zone 3 Capacity Enhancement pipeline project,” said Waite.

PointLogic Energy derives real-time natural gas production data from publicly available interstate pipeline flow data in the lower-48 United States. The energy division at IHS Markit provides market insight and analytics for North American power, gas, coal and renewables.

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