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Will US Natural Gas Production Continue to Test New Records?

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Natural gas production

US natural gas production from the lower 48 US states averaged 81.7 Bcf/day (billion cubic feet per day) for the week ended December 28, 2015. The current production is almost equivalent to last week’s natural gas production. However, it’s 2% more than last year’s level of 80.1 Bcf/day during this period of the year. US natural gas production peaked at 82 Bcf/day in September 2015.

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Impact

The weekly natural gas production from wellheads rose by 2% for the week ended December 28, 2015 compared to last year. Production from dryheads rose by 1.3% year-over-year. But weekly natural gas production is almost flat. That suggests that US natural gas inventory could fall, as we saw in the previous part of the series.

The EIA (U.S. Energy information Administration) suggest that US natural gas production could average 79.6 Bcf/day in 2015 and increase to 81.1 Bcf/day in 2016. The consensus of rising production will continue to put pressure on the natural gas market. US production rose for the tenth straight year. The current momentum suggests natural gas production could test new records. Let’s check US consumption in the next part of the series.

US production could increase due to an improvement in drilling methods, lower drilling costs, and online new pipelines. However, long-term lower natural prices affect upstream players such as Apache (APA), Anadarko Petroleum (APC), Exco Resources (XCO), and Chesapeake Energy (CHK). They also influence ETFs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DB Energy ETF (DBE), the Fidelity MSCI Energy ETF (FENY), and the PowerShares DWA Energy Momentum ETF (PXI).

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