Resource investment managers Goehring and…
OPEC+ members have so far…
U.S. natural gas production will increase by 5% or 5 billion cubic feet per day in 2023, and by 2% next year, with growth primarily in the Permian basin region and driven by high oil prices and improved well-level productivity, the Energy Information Administration (EIA) forecast on Wednesday.
The EIA estimates that Permian region natural gas production alone will increase by 11% in 2023 and 6% in 2024.
Currently, the Permian region accounts for around 25% of all marketed natural gas produced in the U.S. Lower 48 states.
Spurring production is an increase in oil prices, which particularly affects Permian gas due to the fact that most of this is associated natural gas production from oil wells, rendering production in tandem with crude prices.
The EIA noted that continued advances in hydraulic fracturing and horizontal drilling techniques are also spurring well productivity, with the length of a well’s horizontal section increasing from less than 4,000 feet in 2010 to over 10,000 feet in 2022.
The agency also noted that despite the fact that the number of rigs deployed in the Permian region had decreased this year, natural gas production has increased. There are approximately 30 fewer rigs operating in the Permian now, compared to the beginning of this year, yet production is increasing.
The EIA is expecting Permian region natural gas to see further production increases this year and next, as prices of West Texas Intermediate (WTI) remain high, incentivizing producers.
The EIA forecasts that WTI will average $83.22 per barrel in 2023.
While the EIA’s WTI price forecast is largely driven by an extension of Saudi and Russian crude oil production cuts, the intensifying conflict between Hamas and Israel, which now threatens to turn into a multi-front conflict engulfing Syria and Lebanon in the least, could put major upwards pressure on prices.
WTI was trading at $88.14 per barrel at 8:31 a.m. ET on Wednesday, driven by an escalation of the conflict in the Middle East following a missile strike on a Palestinian hospital in Gaza late on Tuesday.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com