Driven by Oversupply and Seasonal Demand Decline, U.S. Natural Gas Production Tumbles in October, Dropping to Levels Not Seen Since 2014, IHS Markit Says

October natural gas production declines to lowest level since July 2014


November 7, 2016

HOUSTON (November 7, 2016) – Marking its second consecutive month of declines, U.S. natural gas production levels in the lower-48 states dropped by nearly 2 percent in October 2016 compared to September 2016 levels, according to analysis from IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions. October’s decline brings production levels for the year-to-date down 1.4 percent or 1.0 billion cubic feet of gas/day (Bcf/d) versus the same period in 2015. 

Overall, lower-48 U.S. dry-gas production averaged 70.7 Bcf/d, IHS Markit said, which represents a 1.3 Bcf/d (1.8 percent) decrease from production levels in September 2016. 

IHS Markit business unit PointLogic Energy tracks U.S. production levels on a daily basis across 92 producing areas in the lower-48 states. October 2016 production levels also declined considerably compared to October 2015 levels (by 2.6 Bcf/d, or 3.6 percent), due to sustained low prices for the commodity, which have persisted since the end of last winter.       

“Production levels in South Texas and the Northeast fell off a combined 1.3 Bcf/d from September to October,” said Jack Weixel, vice president for analytics at PointLogic Energy, part of IHS Markit. “These are the largest month-on-month regional declines we’ve seen in the history of our dataset. Within the Northeast, dry portions of the Marcellus (Pennsylvania and West Virginia) saw declines, in addition to the Utica in Ohio. Producers in the Northeast were forced to choke-back wells because there was nowhere for the gas to go. Seasonal demand destruction and high storage-inventory levels left few options for the gas. In response, we saw market prices drop down below 40 cents-per-MMBtu (million British thermal units) for several days during the month. South Texas production in the Eagle Ford is also hurting, tallying its sixth straight month of declines.”      

October data shows that the only producing areas that showed any modest gain in October were the Gulf of Mexico, northern Louisiana and the Green River Basin in Wyoming. 

“Declining production in the south and trapped production in the north is leaving Henry Hub in relatively short supply for the next 12 months,” said Sam Andrus, senior director of North American natural gas analytics at IHS Markit. “With Sabine Pass having brought both Trains 1 and 2 back online and Train 3 beginning to ramp up, Henry Hub will reflect this growing demand and be exposed to the vagaries of weather demand this winter and next summer. As a result, this will leave only South Central storage and increased gas-to-coal switching to help balance the market.”        

PointLogic Energy derives real-time natural gas production data from publicly available interstate pipeline flow data in the lower-48 United States. The energy division at IHS Markit provides market insight and analytics for North American power, gas, coal and renewables.  

To speak with Jack Weixel or Sam Andrus, or for more information on PointLogic Energy or IHS Markit natural gas data and analytics, please contact Melissa Manning at melissa.manning@ihsmarkit.com.  


About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions.  Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

PointLogic Energy delivers trusted energy market fundamental data and analysis to participants in the oil and natural gas sectors. For more information on its dynamic online tools, in-depth market coverage, and trend analysis please visit www.pointlogicenergy.com.


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All Industries
IHS Media Relations, +1 303 305 8021
press@ihs.com
or
Chemicals; Energy; Natural Resources
Melissa Manning, +1 832 458 3840
melissa.manning@ihsmarkit.com

 

 

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