Weekly natural gas production marches up despite fewer rigs
According to Bentek Energy, total natural gas supply was unchanged during the week ended April 15 from the previous week. On a year-over-year basis, however, natural gas supply was up 8.8%.
For the week ending April 17, weekly natural gas rig count decreased by eight to 217 compared to the previous week’s count, according to the U.S. Energy Information Administration (or EIA).
Production and rig counts decreased in January
On a monthly basis, US dry natural gas production declined 1% in January 2015 over the previous month, according to the latest EIA data available. Natural gas rig count decreased to 320 in January from 340 in December last year.
EIA projects higher 2015 and 2016 production
The EIA, in its Short-Term Energy Outlook released on April 7, 2015, reported that dry natural gas production is set to increase to 74.09 Bcf/d (billion cubic feet per day) in 2015 and 75.49 Bcf/d in 2016. Higher production in the Marcellus, Eagle Ford, and Utica will drive this growth.
As a point of reference, the EIA estimates natural gas production averaged ~73.75 Bcf/d during 4Q14.
Who will reap the benefit?
Upstream and midstream companies will benefit from higher natural gas production. Many midstream natural gas companies and MLPs operate in these regions. These companies generate revenues from natural gas volume transported, stored, treated, and delivered. Higher supply should benefit MLPs and midstream operators like Kinder Morgan (KMI), Regency Energy Partners (RGP), ONEOK Partners (OKS), and Enterprise Products Partners (EPD). EPD is 10.4% of the Alerian MLP ETF (AMLP).