Output gains in the Northeast and Texas have helped U.S. gas production elevate from its lows reached in June. While still 6.1 Bcf/d removed from the high of 95.6 reached in November 2019, gas production has increased by nearly 2.2 Bcf since June.
Total U.S. Production
U.S. natural gas production has trended higher in the past few months as producers have returned previously shut-in volumes. According to Bloomberg data, Lower-48 dry gas production had fallen from an average of 93.3 Bcf/d in March to 85.1 Bcf/d in June. Much of the declines in gas production came from oil-directed plays as the price of crude plummeted. Texas saw the most change; gas production decreased by an estimated 2.95 Bcf/d during that time.
Northeast Gas Production
The Appalachian basin, the largest in the U.S. by volume, has seen production fall off this month. EQT Corp, the biggest U.S. natural gas producer, had curtailed around 1.4 Bcf/d from May through July. This week, the company said it again had reduced natural gas production by about 425 MMcf/d starting September 1. Basis prices (discounts to Henry Hub) in the area deteriorated as production returned in August, just as Henry Hub prices were strengthening. Prices in Appalachia remain depressed despite the reduced production coming out of the basin in September. Production is averaging 31.85 Bcf/d in September thus far, a decrease of 0.3 Bcf/d from August’s average of 32.15 Bcf/d.
Texas Gas Production
Texas dry gas production has also decreased this month. After climbing from 20.3 Bcf/d in June to 21.57 Bcf/d in August, production is now averaging 21.46 Bcf/d in September. Data from PointLogic shows that the reduction in gas production is coming from the Permian Basin. Production in East Texas (which includes some Haynesville gas) has remained relatively steady since July, while the Permian has lost 757 MMcf/d in output during that time.
Dry gas production had reached 4.96 Bcf/d in April. Production then fell through June to 4.2 Bcf/d, a 0.76 Bcf/d decrease. Since June, production has steadily increased to 4.97 Bcf/d, near the pre-COVID level.
All these production estimates are based on pipeline receipts and not official well volumes from the respective states. Therefore, they may not be precise and are early indications only. Still, production in many places has returned, and there has been little new drilling activity. AEGIS expects dry-gas production to hold steady near current levels through mid-2021.