Friday, May 21, 2021

EIA Natural Gas Weekly Update

From the Energy Information Administration:

for week ending May 19, 2021   |  Release date:  May 20, 2021   |  Next release:  May 27, 2021

In the News:

Dry natural gas production continues to grow from pandemic lows as rig count also increases

Our May Short-Term Energy Outlook (STEO) forecasts May 2021 dry production will average 90.8 billion cubic feet per day (Bcf/d), compared with 87.8 Bcf/d in May 2020. The record-high production level for U.S. natural gas was set in December 2019 when dry production hit an average of 97.0 Bcf/d, which was 9.2 Bcf/d higher than May 2020 levels. Except for February 2021, when weather-related well freeze-offs contributed to natural gas production shut ins, May 2020 was the low point for natural gas production so far during the pandemic as COVID-19 mitigation efforts and warmer weather resulted in diminished natural gas demand and lower prices. We expect dry natural gas production to continue to grow through the end of 2022, averaging about 94.4 Bcf/d in November and December of 2022, which is still more than 2.5 Bcf/d below December 2019.

Increased drilling activity is partially responsible for the increase in natural gas production. The number of active drilling rigs in the United States fell to 244 in August 2020, the lowest level since at least 1987, according to data from Baker Hughes Company. The rig count is gradually recovering, and as of May 11, the reported total number of active rigs in the United States was 453, and 100 of those active rigs were directed at drilling for natural gas (compared with a low of 68 in July 2020). Oil-directed activity also results in increased natural gas production because associated natural gas production rises in response to recovery in oil production.

The U.S. plays that are focused on producing natural gas are the Marcellus and Utica formations in the Appalachia Basin and the Haynesville formation in the North Louisiana Salt Basin of northeast Texas and northwest Louisiana. The current rebound in active natural gas rigs has occurred primarily in the Haynesville formation, whose proximity to liquefied natural gas export terminals and industrial demand along the Gulf Coast has supported demand for natural gas production from the Haynesville. The number of active natural gas rigs in the Haynesville as of May 11 (47 rigs) has returned to nearly the same level as the same week in May 2019 (50 rigs). Drillers have increased natural gas rig activity somewhat from 2020 lows in other formations, but they have not returned to 2019 levels.....


Natural gas prices mixed as weather across the country shifts from below- to above-normal during this shoulder season. This report week (Wednesday, May 12 to Wednesday, May 19), the Henry Hub spot price fell 2¢ from $2.90/MMBtu last Wednesday to $2.88/MMBtu yesterday. The natural gas market was fairly balanced this week, with declines in both exports to Mexico and liquefied natural gas (LNG) feedgas largely offset by lower imports from Canada.....


Have I mentioned that I hate the shoulder seasons?