Must-know: Why the EIA is bullish about natural gas production



EIA estimates increase natural gas production

In December, the U.S. Energy Information Administration (or EIA) expects natural gas marketed production to increase to 74.26 billion cubic feet per day (or bcf/d) in 2014 and 76.58 bcf/d in 2015. Both figures are marginally higher than the EIA’s previous month’s estimation.

Over the past few years, most of the production growth has been happening at the seven shales in the United States. Read Part 7 and Part 8 of this series to know the shales in detail.

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In 2013, the United States produced 70.4 bcf/d, or ~5%, which was lower than the projected supply in 2014. Higher natural gas production will arise from US producers such as CONSOL Energy (CNX), Southwestern Energy Company (SWN), and Chesapeake Energy (CHK). Some of these companies are components of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Rapid growth in the Marcellus Shale contributed to the production growth. Higher natural gas production in the Marcellus led to lower gas price in the northeast region. Read Part 7 of this series to know more on the Marcellus shale.

United States to become net liquid natural gas exporter in 2015

Cheniere Energy’s (LNG) Sabine Pass export terminal will begin its service in 2015. The EIA expects that the United States will start exporting natural gas. Cheniere Energy plans to use the terminal to export liquefied natural gas (or LNG).

Some of the higher production in the Eagle Ford Shale in South Texas will be set to export to meet the growing demand from Mexico’s electric power sector. Mexican gas production is unlikely to grow strongly in the near future.

In the next part of this series, we’ll discuss how natural gas prices may affect its consumption.

To know more on natural gas price trends, read our articles on Natural gas prices are choppy from inconsistent weather forecasts.


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