US dry gas production could grow for rest of decade: Raymond James
Washington (Platts)--22Jan2013/155 pm EST/1855 GMT
US natural gas production will continue to grow for as much as another
decade, investment bank Raymond James' top oil and gas analyst said Tuesday,
driven by huge production gains in the Marcellus Shale and gas associated
with oil and natural gas liquids drilling.
"Now that the dry gas rig count has dropped precipitously (down 60% year
over year), many energy analysts are eagerly anticipating an imminent
roll-over in U.S gas supply," Raymond James Marshall Adkins told his clients
in a note.
"We guess gas supply didn't get the memo because it continues to climb
steadily higher," Adkins said. "In fact, our updated gas production model now
says that U.S. gas supply is not likely to roll over anytime soon and could
even continue growing through the rest of this decade (especially if oil
prices stay anywhere near current prices)."
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Adkins predicts US gas supplies will grow another 1.3 Bcf/d this year
and 600,000 Mcf/d next year as more and more dry gas production comes from
the Marcellus Shale and associated gas.
While dry gas production has shrunk in the Haynesville, Fayetteville,
and Barnett shales as rigs have left for brighter horizons, the Marcellus has
replaced that production and then some, Adkins said.
"Despite losing 53 rigs, gas production is still up an estimated 3.1
Bcf/d this gas year (November to November)," Adkins said.
"Wait a minute! Weren't low prices and high shale gas decline rates
supposed to force U.S. gas supply sharply lower? Not for the Marcellus,"
Adkins said, noting that drillers can make money at $3.00/Mcf in the
Adkins sees another 3.2 Bcf/d worth of gas production out of the
Marcellus through 2014 with the Pennsylvania play ending 2014 at 10.4 Bcf/d
worth of production, up from the current 7 Bcf/d. The production increases
will come from backlogged wells being hooked to new pipelines in what Adkins
called "a perfect storm" for gas supplies.
The biggest contributor of gas associated with oil drilling is Texas'
Eagle Ford Shale where more than 250 rigs are active, Adkins said. He thinks
the Eagle Ford will add another 900,000 Mcf/d of annual growth to gas
supplies this year and next.
For the entire US, Adkins expects 2013 production to average 66.8
Bcf/d, up 1.3 Bcf/d, and 2014 production to average 67.4 Bcf/d, up 600,000
Mcf/d. The latest numbers from the US Energy Information Administration
showed US natural gas production averaged 66.4 Bcf/d as of October, up 1.6
Bcf/d from a comparable period in 2011.
--Bill Holland, email@example.com
--Edited by Katharine Fraser, firstname.lastname@example.org