Are The Good Times Over For Growth In US Shale Gas?

U.S. natural gas production could decline in 2016 for the first time in 10 years, driven by low oil prices after a decade of gangbusters growth from shale plays.

While most analysts forecast gas production will continue growing year-over-year, albeit at a slower pace, a couple of outlier analysts believe low oil and gas prices will prompt drillers to cut spending enough to reduce gas production next year.

Any talk of cutbacks is an early sign that low oil prices have slowed the U.S. shale gas boom that has revolutionized global markets and is expected to transform the nation into a net exporter of gas by the end of the decade.

U.S. gas production has increased every year from 51.9 billion cubic feet per day in 2005 to a record 74.4 bcfd in 2014, a 43 percent increase. The U.S. Energy Information Administration expects gas output to reach 78.4 bcfd in 2015 and 80.0 in 2016.

The lack of consensus among analysts shows how much still depends on what oil prices do in the coming months.

U.S. crude oil futures fell about 60 percent from a high over $107 a barrel in June to a six-year low under $43 on Tuesday.

“It all depends on market prices. If we get higher gas and oil prices in the next three or four months than gas production won’t decline next year,” said Randall Collum, Managing Director, Supply Analytics, at energy data provider Genscape, which expects gas production to fall 1.1 bcfd next year.

Any pullback in gas production was considered unthinkable just six months ago.

“If you look back at what we said in October when oil was trading around $80 a barrel, we were forecasting gas production would grow by 2 bcfd in 2016,” Collum said.

7 Comments on "Are The Good Times Over For Growth In US Shale Gas?"

Dredd on Wed, 18th Mar 2015 3:16 pm 



There weren’t any good times. Just bullsh*t spread as icing on the propaganda cake.

Plantagenet on Wed, 18th Mar 2015 3:54 pm 



I don’t get this article—Why would the oil glut produce a decline in NG production?

The two markets are pretty separated, as far as I can see. IN fact shale gas created a glut and a price collapse in NG a couple of years ago and oil prices didn’t collapse then—-why should the current collapse in oil prices now affect NG prices?

tahoe1780 on Wed, 18th Mar 2015 4:07 pm 



Isn’t natural gas a “byproduct” of shale oil production? Haven’t drillers moved rigs to “wet gas” sites?

rockman on Wed, 18th Mar 2015 4:29 pm 



“U.S. gas production has increased every year from 51.9 billion cubic feet per day in 2005 to a record 74.4 bcfd in 2014”.

During that time period Marcellus production increased by 16 billion cfpd. The MS alone contributed 71% of that increase in NG production. During that time period NG from the EFS increased from zero to 4.1 bcfd. Or 18% of that increase. Thus the increase in NG production from just the EFS and the MS represent 89% of the total gain. And all the rest of the pure NG shale plays as well as the associated NG from the oil shale plays amounted to only 1/5 of the increase.

And the depletion of the heritage MS wells has finally caught up with that production curve. The net gain (new production – decline of older wells) has dropped to an insignificant level. The MS production may not fall off very quickly but the days of adding a meaningful increase in US NG production are over. And today we see the rig count in the EFS dropping like a rock with no indication rate that the slowdown has begun to abate. We’ll have to wait for the rest of the year to measure the (new production – decline) metric for the EFS to know if it mimics the MS stat. It might be better…it might be worse. Time will tell.

rockman on Wed, 18th Mar 2015 4:34 pm 



Tahoe – The GOR (gas/oil ratio) varies greatly from shale play to shale play. In fact it varies greatly with the same trend: there is an “oil window” in the Eagle Ford Shale as well as a “NG window”. Essentially depth dependent. A shale is neither NG or oil productive per se. The plays can contain oil wells or NG wells and all the shades in between.

Plantagenet on Wed, 18th Mar 2015 4:35 pm 



Thx Rock—that explains it.

I was mainly thinking about the Marcellus and Utica and similar pure NG plays.

Cheers!

rockman on Thu, 19th Mar 2015 6:47 am 



Plant – There are some liquids coming out of the MS. Latest stat for March: 16,712,000 mcfpd and 57,000 bopd. GOR is expressed as bbls/million cf so the MS GOR is 3.4 bbls/mmcf. Certainly not very “rich gas”. When we were running our conventional NG exploration programs we targeted reservoirs with GOR’s exceeding 100 bbls/mmcf.

And yes: for the oil patch mm = million. IOW a thousand thousand