Natural gas production dips on month-over-month basis

The U.S. averaged 72 billion cubic feet per day of natural gas production in June through a month-over-month basis.

In the newest natural gas report from Bentek Energy, an analytics and forecasting firm under Platts, the U.S. averaged 72 billion cubic feet per day of natural gas production in June through a month-over-month basis. This was a decrease of roughly 0.6 Bcf/d in May, which equals approximately a less than 1 percent decline in production from May to June.

According to the report, the average cost of service fell by 20 percent when compared to the same time last year. Drill times have also plummeted in the last year by three to five days in various shale regions throughout the U.S.

"The month-on-month U.S. production decline observed in June was largely attributed to continued maintenance events in the Northeast," Sami Yahya, an energy analyst for Bentek said in the press release. "The combination of reduced drilling and completion costs, as well as considerable efficiency gains in the field, has helped producers across most regions better cope with the distressed commodity prices."

Yahya added producers are able to utilize fewer rigs, but at the same time, drill more wells. This is likely due to many producers in the nation no longer drilling and completing various wells within an area, and then moving on to the next region to do the same thing.

With the production going down, producers are spending more time at each well to ensure quality of production during the downtime. Yahya said producers want to drill in all of the wells first and then come back to complete them, which saves companies money by reducing the need for completion rigs to be constantly moving around.

"This can also be viewed as completion deferment," said Yahya.  "It's also worth noting that high-grading - or focusing on higher initial production rate areas - remains the primary trend in most areas."

Oil downfall affecting natural gas production
The International Energy Agency also recently announced that worldwide production could still get lower, according to the organization's monthly oil report. This forecast in declining oil production directly affects the overall natural gas supply.

Onshore storage is growing limited, which means more natural gas production is limited. However, gains in the U.S. still drive the natural gas production rate as it has not been nearly affected as the oil industry.

More information on natural gas production can be found on PennEnergy's research area.

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