Report: US natural gas production rose slightly in January

Natural gas production in the Lower 48 US averaged 71.5 billion cubic feet per day (bcf/d) in January, which is up nearly 0.5 bcf/d, compared to the December average, according to Platts Bentek, an analytics and forecasting unit of Platts. On a month-over-month basis, January natural gas production was up less than 1% from December.

The US Energy Information Administration (EIA) will publish its domestic production estimates for September on Feb. 29.      

"The growth observed in the January over December was the culmination of relatively large movements in production across several regions," said Sami Yahya, Platts Bentek energy analyst. "The Northeast predictably was responsible for the largest shift, increasing by about 750 million cubic feet (MMcf/d) in January over the previous month. Production average in the Midcon basin jumped by nearly 350 MMcf/d, which was countered by a drop of 360 MMcf/d and 100 MMcf/d in the Southeast and Texas, respectively. Production in the Midwest and Southwest regions dipped by 75 MMcf/d each, while the Rockies remained flat month-on-month."

The growth spurt in the Northeast was partially a recovery from a dip caused by lower than normal demand that took place in late December. Northeast production was curtailed by an average of 0.5 bcf/d during the last week of December, as warmer temperatures blanketed the region and suppressed demand. The other reason for the growth spurt is the commencement of Transco's Leidy Southeast expansion on Jan. 5, providing 525 MMcf/d of capacity from the Dry Marcellus in northeastern Pennsylvania to as far as Choctaw, Alabama.Northeast production managed a new record of 22.5 bcf/d in late January.

Of note, said Yahya, there was little to no effect from freeze-offs this winter season in the Northeast, which is in contrast with past winter seasons.

"As the 2015 fourth-quarter results trickle out over the next few weeks, and we learn more about the 2016 guidance, the primary theme among producers will likely be that of unrelenting perseverance," Yahya said. "The number of active rigs in the country continues to slide, and more budget cuts are expected. Slowing down drilling programs or even halting them is anything but a losing bet, and relying heavily on the availability of wells in backlog inventory is in the cards. Producers will need to raise capital to complete whatever backlog of wells they have, and thus selling some non-core assets is also a big possibility for many of the operators."

The latest Platts Bentek data analysis suggests 2016 US natural gas production will average approximately 71.7 bcf/d, with some growth geared toward the end of the year. This will mark a year-on-year growth of less than 1%.


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