South Texas production continues to struggle as drilling activity rotates out of Eagle Ford formation and into Permian Basin
HOUSTON – US natural gas production levels in the lower 48 states increased by about 1.4 percent in Aug. 2016 compared to July levels, according to analysis from IHS Markit.
This marks the second month in a row where natural gas production outpaced its prior month’s level, the first such occurrence dating back to Sept. 2015.
Overall, lower 48 US dry-gas production averaged 73 Bcf/d, IHS Markit said, which represents a 1 Bcf/d (or a 1.4 per cent) increase from production levels seen in July.
“Northeast production led the pack again this month, increasing by 0.4 Bcf/d in August compared to July,” said Jack Weixel, vice president for analytics at PointLogic Energy, part of IHS Markit.
IHS Markit business unit PointLogic Energy tracks U.S. production levels on a daily basis across 92 producing areas in the lower 48 states.
While Aug. production levels increased compared to July levels, overall production is down about 0.7 Bcf/d (or 1 per cent) compared to Aug. 2015.
“Gains in the region were largely centered in the Utica shale basin, which has pushed total Northeast production to its highest level since February of this year,” said Weixel.
Aug. data also shows that production in West Texas and the Gulf of Mexico increased compared to July, reflecting greater amounts of associated gas from oil production in the area.
South Texas production continues to struggle as drilling activity rotates out of the Eagle Ford formation and into the Permian Basin, driven by producers searching for better margins during this period of lower oil prices.
“The year-over-year decline in natural gas production is largely due to lower associated-gas production, which fell as oil production declined, but there were also pipeline constraints relative to Appalachia production,” said Sam Andrus, senior director of North American natural gas research for IHS Markit.
PointLogic Energy derives real-time natural gas production data from publicly available interstate pipeline flow data in the lower 48 United States.
“Also, a warmer-than-normal winter left record storage inventories and reduced summer gas-injection demand by almost 4 Bcf/d. However, the warmer-than-normal summer has replaced that demand loss with record gas demand for power generation. The increased demand for power generation has elevated Henry Hub cash prices in the south and is driving production increases in the pipeline-constrained Appalachia Basin,” said Andrus.
The energy division at IHS Markit provides market insight and analytics for North American power, gas, coal and renewables.