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Zeits: Natural Gas Output In U.S. Will Dip in 2016

Average natural gas production in the mainland United States (US) is expected to fall for “the first year in a long while,” wrote energy industry analyst Richard Zeits in an article for Seeking Alpha published on Monday.

In his judgment, average natural gas production for the cautious US during the twelve-month period ending on 30 November 2016 will dip by 0.5 percent.

Additionally, Zeits claimed to be correct in his prediction made last February that the decline in rigs for the lower forty-eight states at the time represented “business as usual.” At the time, he said the industry would not see anything approaching the 350 rigs that were in production in 2014, and observed that a count of around 150 rigs “would be sufficient” for production to grow by 2 to 3 billion cubic feet a day per year.

According to data from Baker Hughes, Zeits noted the number of rigs since February has averaged at approximately eighty-three, and has remained relatively steady. The lowest count in the roughly last eight months was eighty on 3 June, and the 100-rig mark was surpassed as recently as last week.

The number of rigs stayed on the low side following an unseasonably warm February and March in the States. The horizontal and directional gas rig count were “sufficient operationally”, while underground natural gas storage will end the injection season in early November at the cusp of the “full” mark. Thus, Zeits he feels that demand for natural gas is being met despite the anticipated slight decrease in output.

Regarding the 2017 season commencing this November, Zeits feels the rig count excluding vertical rigs will overcome the 150 mark prior to June 2017. At least twenty-five vertical rigs are expected to become operational between November and next June.

By Erwin Cifuentes for Oilprice.com

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