• 4 minutes End of Sanction Waivers
  • 8 minutes Balancing Act---Sanctions, Venezuela, Trade War and Demand
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 14 minutes What Would Happen If the World Ran Out of Crude Oil?
  • 1 min ..
  • 2 hours Summit: Kim, Putin To Meet Thursday in Russia’s Far East
  • 10 hours Deep Analysis: How China Is Replacing America As Asia’s Military Titan
  • 9 hours New German Study Shocks Electric Cars: “Considerably” Worse For Climate Than Diesel Cars, Up To 25% More CO2
  • 8 hours Don't Climb Onto the $80+ Oil Price Greed Roller Coaster, Please.
  • 39 mins Iran Sabre Rattles Over the Straights of Hormuz
  • 22 hours Saudi Arabia Says To Coordinate With Other Producers To Ensure Adequate Oil Supply
  • 16 hours Populist Surge Coming in Europe's May Election
  • 20 hours Liberal Heads Explode as U.S. Senate Confirms Oil Lobbyist David Bernhardt as Interior Secretary
  • 2 hours "Undeniable" Shale Slowdown?
  • 2 hours How many drilling sites are left in the Permian?
  • 14 hours China To Promote Using Wind Energy To Power Heating
Alt Text

This Legendary Shale Basin Just Broke Its 2011 Production Record

The Haynesville Shale in northeastern…

Alt Text

Does Germany’s LNG Strategy Make Sense?

The construction of new LNG…

Alt Text

The Tipping Point In Trump’s Quest For Energy Dominance

Trump’s latest executive order to…

Robert Rapier

Robert Rapier

More Info

Trending Discussions

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

Trending Discussions


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