March US natural gas production hits 33-Month low – IHS Markit

Natural gas production

US March 2017 natural gas production levels 4% lower than March 2016 levels

Lower-48 US natural gas production averaged just 70.2 billion cubic feet per day (Bcf/d) during March 2017, dropping monthly gas production to a low not seen in 33 months (since July 2014), according to IHS Markit.

“Unlike just a few years ago when gas production trended steadily upward, recent US natural gas production has spiraled downward for more than a year,” said Jack Weixel, vice president for analytics at PointLogic Energy, a business unit of IHS Markit, which tracks U.S. production levels on a daily basis across 92 producing areas in the lower-48 states.

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In July 2014, US natural gas production averaged 70.3 Bcf/d, but was on the rise due to a deficit of underground storage gas following a particularly cold winter.

“Two warm winters in a row have moderated prices due to lackluster demand, and the market is waiting very patiently for a rebound. While average domestic natural gas demand was soft this past winter, increased exports from the US this coming summer will put upward pressure on prices,” Weixel said.

“Increased rig counts have not translated into elevated production levels yet, and this summer will be pivotal in determining just how large of a hole gas suppliers have to dig themselves out of.”

According to the IHS Markit monthly US natural gas production analysis, March 2017 production was 0.7 per cent below Feb. 2017 levels.

In the first quarter (Q1) of 2017, production has averaged 70.5 Bcf/d, with January and March setting new records in futility.

When compared to Q1 2016 production, Q1 2017 US natural gas production output is down 2.8 Bcf/d, or 3.8 per cent. Of utmost concern to the market is the monthly reversal of fortune in several key producing areas.

After increasing by nearly 0.2 Bcf in Feb., Texas natural gas production fell more than 0.3 Bcf/d in March, and is now averaging 16.4 Bcf/d, the Lone Star state’s lowest gas production level since Dec. 2009.

The Southeast also gave back any gains seen in Feb., with both North and South Louisiana seeing the steepest declines in natural gas production.

For the US as a whole, March 2017 natural gas production levels are 4 per cent lower (2.9 Bcf/d) than March 2016 levels.

Moreover, compared to the high-water month of Feb. 2016, domestic gas production is now 5 per cent lower, or 3.7 Bcf/d.