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US natural gas production experiences modest recovery in November

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November natural gas production rebounds from Oct. lows as regional markets rebalance

HOUSTON– Lower 48 US natural gas production rose slightly in Nov., averaging nearly 72.1 billion cubic feet per day in Nov., which reflects an increase of 1.6 per cent (1.1 Bcf/d) above the average in Oct., according to analysis from IHS Markit.

The production increase, although modest, comes after the US natural gas sector experienced production lows in Oct. not previously seen since July 2014.

Overall, to date, 2016 natural gas production in the US is approximately 1.1 Bcf/d lower than during than the same period in 2015, IHS Markit said.

“While natural gas prices appear to be on the mend, expectations for a late-2016 U.S. production rally are dim,” said Jack Weixel, vice president for analytics at PointLogic Energy, part of IHS Markit.

IHS Markit business unit PointLogic Energy tracks US production levels on a daily basis across 92 producing areas in the lower-48 states.

“In Texas, gas production was able to come back from the brink in November and average approximately 17.2 Bcf/d after October levels fell below 17.0 Bcf/d for the first time since February 2011,” Weixel said.

Despite the recovery in Nov. 2016, production levels are still considerably lower than where they stood in Nov. 2015 (down by 1.4 Bcf/d, or 1.9 per cent), due to sustained low prices for the commodity, which have persisted since the end of last winter.

“Northeast production also staged a major rally, up nearly 1 Bcf/d (4.6 percent) month-on-month with gains seen mostly in the dry portions of the Marcellus in Pennsylvania,” said Weixel.

Weixel said that recovery in the Utica has been slower to bounce back, but that may be alleviated by a pipeline expansion that will come in service later this month.

“In addition to colder weather increasing local demand this month, the market is also anticipating the full service opening of Tallgrass’s Rockies Express Zone 3 Capacity Enhancement pipeline project,” Weixel said. “The expansion of a major pipeline artery leaving the Northeast alleviates some of the demand constraint that caused regional prices to crater in October, trapping production in the region. Tallgrass hopes to have the 0.8 Bcf/d expansion ready to move gas west, out of Ohio, by mid-December,” said Weixel.

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