• 5 minutes Trump will capitulate on the trade war
  • 7 minutes China 2019 - Orwell was 35 years out
  • 12 minutes Glory to Hong Kong
  • 15 minutes ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 1 min Peaceful demonstration in Hong Kong again thwarted by brutality of police
  • 38 mins Here's your favourite girl, Tom!
  • 2 hours Civil Unrest Is Erupting All Over The World, But Just Wait Until America Joins The Party...
  • 2 mins Australian Hydroelectric Plant Cost Overruns
  • 12 hours Brexit agreement
  • 4 hours China's Blueprint For Global Power
  • 4 hours Nigeria Demands $62B from Oil Majors
  • 17 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 19 hours IMO 2020:
  • 21 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 13 hours 5 Tweets That Change The World?
  • 12 hours Bloomberg: shale slowing. Third wave of shale coming.
  • 15 hours The Problem Is The Economy, Not The Climate

Breaking News:

Russia Replacing Oil Workers With Robots

Alt Text

Is The U.S. Gas Boom Already Over?

As natural gas prices continue…

Alt Text

It’s “Feast-to-Famine” For The Global Gas Industry

Oversupply and high stockpiles have…

Robert Rapier

Robert Rapier

More Info

Premium Content

There’s No Slowing U.S. Natural Gas Production

Last August I warned that a Natural Gas Price Spike May Be Looming. The reason for the warning was that natural gas in storage – which the Energy Information Administration (EIA) reports every Thursday – had fallen to abnormally low levels just ahead of high-demand season.

Indeed, natural gas inventories remained low throughout the fall, and by November prices had spiked by 60 percent. By late November, it seemed that prices were destined to hit the $5 per million British thermal units (MMBtu) level.

However, the price peaked about the time inventory levels began to head back to the lower end of the normal range. Last week’s report marked the first time since last June that the level reached the lower end of the 5-year minimum range:

Natural gas in storage.

As natural gas levels headed toward the normal range, prices tumbled. From a close of $4.70/MMBtu in November, prices during the first week of January fell back below $3.00/MMBtu.

Natural gas inventories are still about 11 percent below average for this time of year, and there is a lot of winter left. But, unless the rest of the winter is unseasonably cold, the recent trend suggests that natural gas prices may spend most of 2019 below $3.00.

Demand for natural gas continues to grow along multiple fronts. For example, the EIA reported that liquefied natural gas (LNG) exports set two consecutive monthly records in November and December 2018. EIA estimates that LNG exports averaged 3.6 billion cubic feet per day (Bcf/d) in November and 3.9 Bcf/d in December. Related: Gasoline Overproduction Leads To Negative Margins

But supply is more than keeping pace. Not only does production in the Appalachia Region continue to grow unabated, but the associated gas (co-produced with oil) in the Permian Basin has started to have a large impact on the natural gas market over the past year or so. Due to logistical constraints in the Permian Basin, this at times has led to significant flaring and even natural gas prices falling below zero at times in the area.

For perspective, current natural gas production in the Permian Basin is about 13 Bcf/d. That reflects a doubling of production there in just over two years, and is now second only to the Appalachia Region’s 31 Bcf/d.

I will close by pointing out that the Appalachia Region produced 13 Bcf/d – the current level of production in the Permian – in 2013. Permian Basin gas production isn’t growing quite as quickly as that in the Appalachia, but the resource potential suggests that both oil and gas production in the Permian will continue to grow for a number of years.

It seems inevitable that we are going to be awash in natural gas well into the next decade.

By Robert Rapier

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Dan Foster on January 27 2019 said:
    It seems an almost concentrated effort by some drillers to keep prices low doesn't it. It seems the $150 billion investment in natural gas in the U.S. by Saudi may cut that awash, at least domestically,down to a more profitable price range, if that was the plan in Washington. It would be interesting to have the phone records of those natural gas drillers over the past 10 years. Something true reporters would seek.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play