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EIA Projections for December 2015: Key US Shale Natural Gas Production

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Key US shale natural gas production

The EIA (US Energy Information Administration) released its Drilling Productivity Report on November 9, 2015. The EIA expects less natural gas production at four key US shales by December compared to October, but it expects production to rise at three key shales during the same period.

Aggregate natural gas production at the seven key shales already fell in October compared to September. By December, aggregate natural gas production at the seven key shales is expected to fall by 1.5% compared to production in October. The EIA estimates that natural gas production will fall by 0.60% in November compared to October.

The EIA also projected that crude oil production at the seven key shales will fall by 4.1% from October to December 2015. (See Part 8 of this series to learn more about the EIA’s forecast for crude oil production for the remainder of 2015.)

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Utica Shale versus Eagle Ford

The Utica Shale is the fastest growing natural gas-producing shale in the United States. Its production is expected to accelerate in November and December 2015. Production at the Utica Shale is expected to grow by 4% during the same period, the highest rate among the key shales. The region accounted for ~7% of key US shale aggregate natural gas production in October. The EIA expects the Haynesville Shale, the third-largest shale among the key US shales, to increase production by 0.4% by December.

At the Marcellus Shale, the biggest natural gas-producing shale in the United States, December production is expected to fall by 2.5% from its October level. The Eagle Ford Shale is the second-largest natural gas producer among the seven unconventional shales. It could see production fall by 4.4% over the same period—the most significant fall in natural gas production among the shales.

The Niobrara Shale is relatively smaller shale. It could see a 2.7% fall in natural gas production by November.

How this could affect producers

Companies such as EQT Corporation (EQT) and Consol Energy (CNX) may slow down production. This will decrease Marcellus Shale production over the next two months. Reduced Eagle Ford Shale production could be led by producers such as Encana Corporation (ECA) and BP (BP). This would be negative for these Eagle Ford producers.

Reduced Niobrara natural gas production could be driven by producers such as Bonanza Creek Energy (BCEI). In contrast, companies like Chesapeake Energy (CHK) may drive greater Utica production, which will likely be beneficial for them.

EQT accounts for 0.1% of the SPDR S&P 500 ETF (SPY).

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