US EIA Trims Gas Production Forecasts on Lower Prices, Curtailments

SEATTLE (Oil Monster): The US Energy Information Administration July 7 again lowered its estimates for natural gas marketed production for the rest of 2020, pointing to low gas and oil prices and production curtailments, but it anticipated a pickup in production toward the second half of 2021, as prices rebound.

The agency, in its July Short-Term Energy Outlook, lowered by 830 MMcf/d to 94.15 Bcf/d its gas marketed production estimate for the US in the third quarter of 2020, and trimmed Q4 estimates as well by 390 MMcf/d to 92.16 Bcf/d.

“EIA forecasts that US natural gas production will decline 3% in 2020 as a result of decreased drilling activity and production curtailments caused by falling natural gas prices,” said EIA Administrator Linda Capuano, in a statement accompanying the outlook’s release.

The report said declines in gas marketed production would be greatest in the Permian Basin, as the drop in drilling activity and low crude oil prices reduce associated gas from oil-directed wells. The low point for dry gas production is seen as likely in Q2 2021, averaging 13.2% below the Q4 2019 peak. Then as Henry Hub prices rise and economic conditions improve, EIA said it expects dry gas production to grow again, hitting 85.6 Bcf/d in Q4 2021.

Natural gas consumption estimates for the rest of the year, by contrast, were pushed up in the July outlook. The agency raised Q3 estimates by 1.78 Bcf/d to 75.02 Bcf/d, and Q4 estimates by 940 MMcf/d to 84.24 Bcf/d.

Overall, however, gas consumption is expected to decline 3.1% in 2020, driven by industrial sector consumption pulled down by coronavirus pandemic mitigation and a sluggish economy.

“Natural gas consumption will decrease a further 5% in 2021, as rising natural gas prices make the fuel less competitive in the electric power sector, offsetting increases in consumption in the industrial, commercial, and residential sectors,” Capuano said.

US LNG exports also are seen averaging 2.6 Bcf/d in Q3, down 1 Bcf/d form the last forecast, on lower global demand for natural gas.

Courtesy: www.hellenicshippingnews.com