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US gas output hit 6-month high in February: EIA

28 Apr 2017 20:07 (+01:00 GMT)
US gas output hit 6-month high in February: EIA

Houston, 28 April (Argus) — US natural gas output rose to a six-month high in February as higher prices curbed declines in large producing states such as Louisiana and Texas.

Gross gas production from the lower 48 states, which includes some volumes that do not reach market, rose in February to 80.17 Bcf/d (2.3bn m³/d), up by 1.8 Bcf/d, or 2.4pc from January, the US Energy Information Administration (EIA) said today in its monthly production report.

Output during the month was down by 2.9pc from the all-time high of 82.59 Bcf/d reached a year earlier. That year-over-year decline reflects a sharp downturn in prices in 2016 that forced producers to rein in output. But prices have rebounded from those levels as production declines and growing exports stocked speculation that supplies would fail to keep pace with demand.

Spot prices at the Henry Hub in April have averaged $3.08/mmBtu, up by 62pc from a year earlier. That year-over-year increase has spurred producers to return rigs to gas-producing fields such as the Marcellus shale in Pennsylvania and West Virginia and the Haynesville shale in east Texas and northern Louisiana.

The US gas rig count this week hit 171, up by four units from a week earlier and the highest since December 2015, according to oil field services provider Baker Hughes.

Output from Texas, the largest gas producing state by volume, increased in February by 3.3pc to 21.3 Bcf/d. That month-over-month increase probably resulted from a ramp up in drilling in the Permian basin. Producers have been racing to shore up new oil supplies in the Permian, but each new well there also generates some gas.

Louisiana output shot to 5.16 Bcf/d, up by 4.2pc from a year earlier but 2.4pc lower than in February 2016. Producers have been accelerating the development of the Haynesville because improvements in drilling techniques and the field's proximity to high-demand markets in the southeast are making wells there more lucrative.

Production from North Dakota, home to the Bakken shale, rose in February by nearly 10pc to 1.71 Bcf/d. The increase likely reflects the return of some production as temperatures moderated from January lows.

In addition, output increased in Pennsylvania and West Virginia, rising by 1.7pc and 0.3pc, respectively. Pennsylvania production reached 15.5 Bcf/d, up by 2pc from a year earlier, while West Virginia output climbed to 4.01 Bcf/d, a year-over-year increase of 7.6pc, the EIA said.

Gas production rose in most US states tracked by the EIA, more than offsetting modest declines from California, the US Gulf of Mexico, and other small producing states.