EIA Feb DPR: Production Drop Continues in M-U, but Slows
The latest monthly U.S. Energy Information Administration (EIA) Drilling Productivity Report (DPR) for February, issued yesterday (below), shows EIA believes shale gas production across the seven major plays tracked in the monthly DPR for March will decrease production from the prior month of February. This is the eighth month in a row that EIA has predicted shale gas production will decrease for the combined seven plays. However, the decrease is less than in previous months, meaning the rate of decrease is slowing. EIA says combined natgas production will slide by a cumulative 25 MMcf/d (million cubic feet per day). The Marcellus/Utica, called “Appalachia” in the report, is predicted to decrease by 76 MMcf/d in March compared with February.
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U.S. natural gas production in the Lower 48 states is once again very close to all-time high levels, contrary to the blatherings of groups like the International Energy Association (IEA), which continues its meme that both oil and natgas either already have or will soon peak in demand. That’s just not happening here at home. Natural gas production is up to nearly 104.5 Bcf/d (billion cubic feet per day) over the last week, not far off from the all-time highs of nearly 105.7 Bcf/d recorded in December, according to data from S&P Global Commodity Insights.
Last week, the Baker Hughes rig count added four rigs after losing two rigs the week before. The count went from 619 active rigs two weeks ago to 623 last week. We continue to see the national count stay roughly around 620-630 active rigs. The Marcellus/Utica gained two active rigs and now sits at 44 — the most active rigs we’ve had since last August! Two rigs were added to Pennsylvania, while Ohio and West Virginia each maintained the same count as the previous week.
Once a month, the analysts at the U.S. Energy Information Administration (EIA) issue the agency’s Short-Term Energy Outlook (STEO), their best guess about where energy prices and production will go in the next 12 months or so. We sometimes poke good-natured fun at the EIA because their predictions go up in one month, and in the next month, they go down, etc. What about the latest STEO dart board, published yesterday? It won’t surprise you to read that due to warmer weather, the EIA prognosticators believe the average Henry Hub natural gas spot prices will remain “subdued” around $2.40/MMBtu in February and March. What about for the entire year?
One week ago, the Interstate Natural Gas Association of America (INGAA) Foundation published a report called “Impact of Electrifying Natural Gas Transmission Compression” (full copy below). The Foundation commissioned global consulting and technology services provider ICF to assess and write a report on the potential impacts of electrifying natural gas transmission compression as one tool to address greenhouse gas (GHG) emissions along the natural gas supply chain. What did the researchers find?
BMI, a Fitch Solutions company, recently provided a price forecast for the Henry Hub gas price all the way out to 2028. BMI’s forecast is much rosier than others we’ve read. The U.S. Energy Information Administration (EIA) recently predicted the Henry Hub price will average under $3/MMBtu in both 2024 and 2025. BMI, on the other hand, predicts the HH to hit an average of $3.40/MMBtu this year and $3.60 next year. Their lips to God’s ears!
The Baker Hughes rig count lost ground again last week, as it has in four of the last five weeks. The count went from 621 active rigs two weeks ago to 619 last week. The Marcellus/Utica count was steady at 40 active rigs; however, the mix changed. Pennsylvania kept 19 active rigs as in previous weeks, but Ohio picked up one rig for 13 active rigs, while West Virginia lost one rig for 8 active rigs.
The U.S. Energy Information Administration (EIA) published a post yesterday on the agency’s newly revamped Today in Energy website to announce it expects the Henry Hub natural gas spot price to average under $3.00/MMBtu in 2024 and 2025. What joyous news (not). The post explains the reasoning and thinking of EIA analysts and why they believe the price of natural gas will be, sadly, lower for longer.