How Far Could US Shale Gas Production Drop?



Key US shale natural gas production

Aggregate natural gas production at the key shales fell between June and July 2016. By September 2016, aggregate natural gas production at the seven key shales is expected to fall 1.8% from July 2016. The EIA estimates that natural gas production will fall by 1% between July and August 2016.

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Utica Shale to rise, Eagle Ford Shale to drop sharply

Among the key shales, only the Utica Shale is expected to see higher natural gas production, with a rise of 0.4% in the next two months. The Utica Shale accounted for ~8% of the US shale aggregate natural gas production in July 2016.

At the Marcellus Shale, the biggest natural gas–producing shale in the United States, production is expected to fall by ~0.3% between July and September 2016. The Eagle Ford Shale is the third-largest natural gas–producing shale among the seven key shales. It could see a ~7% production fall by September 2016, the most significant fall in natural gas production among these shales.

How this will affect oilfield service companies

Reduced natural gas production will negatively affect revenues and income for oilfield equipment and service companies such as FMC Technologies (FTI), National Oilwell Varco (NOV), Forum Energy Technologies (FET), and Precision Drilling (PDS). National Oilwell Varco accounts for 0.07% of the SPDR S&P 500 ETF (SPY).


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