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Missing Gas … What Happened to December 2014 Production Gains?

April 22, 2105 | By Luke Larsen

The most recent release from the Energy Information Administration (EIA) as it relates to total U.S. Lower 48 production showed a month-on month loss of 1.4% or 1.2 Billion Cubic Feet (Bcf) in the month of January 2015 versus December 2014. The latest report showed that Total Lower 48 Gross Withdrawals were near 82.23 Bcf/d. Regionally, the EIA suggested that the sector classified as “Other States” reflected the largest decrease month on month of 2% or about 0.7 Bcf/d.

U.S. and Lower 48 States Natural Gas Gross

The definition of the “Other States” category has an interesting history. “Other States” as defined by the EIA is a leftovers category that includes pre-shale revolution EIA-914 Monthly Gas Production Report Methodology – a methodology that has not been updated since April 2010. The sampling survey is defined as being a collection of natural gas production volume information collected on a monthly basis from a certain representation of well operators. These production volumes are requested specifically for Texas, Louisiana, Oklahoma, Wyoming, New Mexico, Federal Offshore Gulf of Mexico and thus subsequently all other States (except Alaska) to make up this aforementioned and now notorious “Other States” region which contained the largest monthly decline as reported this past January.

For January 2015 month end, the EIA reported “Other State” volumes of 33.97 Bcf/d made up more than 41% of the entire Lower 48 gross withdrawals. This was the second largest monthly reported volume in this region after December 2014 (34.66 Bcf/d). This week’s Get the Point addresses the question that the market should be asking: where is the record level of natural gas production that we saw this past December?

State Natural Gas Gross Withdrawls

Before we get into the nuts and bolts of the data, let’s take a quick look at PointLogic Energy’s gross production data which also reflected an all-time high this past December but at a much lower gross wellhead volume just below 79.6 Bcf/d.

Gross Production Withdrawls

Based upon the chart above, one can extrapolate that the differential for Q1 2015 (Jan –March) would be as much as 105 Bcf cumulatively or 1.2 Bcf/d on average that operators under-produced based on December highs.

However, when taking into account an annualized growth factor similar to 2014, one can get a better picture of just how significant production losses have really been. For 2014, gross US wellhead volumes increased nearly 5.4%, rising to 76.8 Bcf/d from 72.9 Bcf/d in 2013.  Assuming the same growth rate for Q1 2015 shows that Total US Wellhead Production inevitably could have been as much as 80.7 Bcf/d for the month of March. Subsequently, implied production loss could be closer to 172 Bcf cumulatively with unrealized daily losses of more than 2 Bcf/d as the market enters summer injection season.

Unrealized losses aside, Total U.S. Wellhead Production remains well below December levels and a deeper dive into the sub regions that make up the “Other States” category is necessary to determine exactly where the gas has disappeared from.


Through the month of March PointLogic data shows that Permian production is running just above 5.8 Bcf/d. We note that this is down more than 2.7% from the volumes in December for this area.

Permian Production

However, as we move into April a quick check of Permian production shows scraped values near a recent high of 2.5 Bcf/d with modeled volumes pushing above 6 Bcf/d. Physical operating conditions have improved despite the current economic environment for crude oil, which has unleashed constant speculation about associated gas production losses within tight oil plays.

Gulf of Mexico Offshore

Through the end of March, PointLogic Energy had Gulf of Mexico volumes running just shy of 3.6 Bcf/d. This was down almost 6% from December levels with OCS volumes holding an overwhelming majority of that decline.

However, just recently the region has turned the corner as this past Discovery Pipeline acknowledging a system glitch which was not recognizing receipts from new wells tied in earlier this year.  New supply receipts (Luscious-Anadarko & Hadrian-Exxon) on Discovery’s offshore pipeline recently jumped from below 200 MMcf/d to nearly 500 MMcf/d due to more gas coming from the Keathley Canyon Connector (KCC) deep-water pipeline.

Gulf Coast Offshore Daily History

These latest volumes have helped push the region back above 4 Bcf/d this past week to a level not seen since October 2014.

Gulf Coast – Louisiana Onshore-South & North

Another large drop in supply from December through March has been the Gulf Coast Onshore in both the south and north. North volumes through March measured 3.6 Bcf/d, down more than 12% from December.

A quick review of Point Logic’s regional supply file shows a coverage ratio that captures more than 70% of the volumes that are visible on a daily or cycle by cycle basis. Looking at the pipeline scrapes that make up the region shows a large intrastate decline on both Regency & Acadian Pipelines as supply point deliveries fell by 17% and 50% respectively. The latest decline rate of Haynesville produced gas might indicate an acceleration of the recent depletion seen in this area. However, because of early spring maintenance season impacting production levels, we may not be able confirm this trend for another month or two. Regardless, the steep nature of the chart below confirms this rate by being similar to the drop in production during both December 2014 and January 2015 leaving February as an outlier month for the time being.

Haynesville Shale

San Juan

While being one of the smaller regions at just over 2.8 Bcf/d, it’s noteworthy that the decline from December through March was just shy of 2% with both Southern Colorado as well as Northwest New Mexico sharing equally in this latest pullback.

Any analysis of lower 48 production would not be complete without mentioning what is going on the Northeastern states. PointLogic notes that that its sample and estimate data reflected a modest weather related pullback on volumes from December to March (19.96 Bcf/d to 19.93 Bcf/d). More specifically production in Pennsylvania which was near 13.0 Bcf/d in December or an all-time high has fallen by almost 2% as of the end of March and averaged 12.7 Bcf/d. While weather is one reason, further speculation may suggest that as futures and spot prices have eroded throughout Q1 2015 that the natural gas market may be seeing some signs of economic related production slowdowns. Spot price discounting has escalated somewhat into April as Tennessee Zone 4 Marcellus cash prices have dipped below a $1.00/MMBtu in recent days (April 21). Declines in Pennsylvania have been offset by large gains further west in the Utica (Ohio) production that has been able to find its way out of the highly constrained area.

In summary, there is no doubt that producers have struggled somewhat to regain the production momentum of last year, but an analysis of the “Other States” category makes evident that through the end of March the Lower 48 is only down about 0.9 Bcf/d from December 2014 highs. The region with the most significant losses is the Gulf Coast-Onshore area as Haynesville’s declines have picked up speed this year. To counter this decline, a pleasant surprise has emerged as Gulf of Mexico volumes have topped 4 Bcf/d for the first time in roughly six months.

More recently, production levels in the first three weeks of April show a decline of only 0.3 Bcf/d versus December 2014 levels as PointLogic April average gross lower 48 wellhead volumes has increased to nearly 79.3 Bcf/d. The market may yet see a return to December 2014 production levels, but the EIA’s “Other States” category in Q1 2015 must reflect recent increases in production evident in nominated flow data.

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