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EIA revises US gas output forecast higher

09 May 2017 19:38 (+01:00 GMT)
EIA revises US gas output forecast higher

Houston, 9 May (Argus) — The US Energy Information Administration (EIA) today revised higher its outlook for US natural gas production as price gains buoy field development.

US output of dry gas, which excludes amounts lost during processing and production, should rise this year 74.1 Bcf/d (2.1bn m³/d), nearly offsetting the year-over-year decline in 2016, the EIA said today in its Short-Term Energy Outlook. Today's forecast represents an increase of 980mn cf/d, or 1.3pc from the agency's April outlook but puts US production slightly below 2015 levels of 74.14 Bcf/d.

US gas market participants are keeping a close eye on US production figures this year following the sharp rebound in prices and a subsequent increase in drilling. Spot prices at the Henry Hub so far this month have averaged $3.09/mmBtu, up by about 60pc from a year earlier. In addition, the US rig count, an indicator of where production is headed, shot last week to 877, more than double the year-earlier level of 415.

Gas production has yet to show marked increases, despite that ramp up in drilling. Dry-gas output rose in February to about 72.1 Bcf, up by 1.9pc from a January but down by 3.4pc from a year earlier, according to the most recent EIA data.

Year-over-year production growth could resume later this year as operators tap gas-rich formations such as the Permian basin in west Texas and southeastern New Mexico and the Marcellus shale in Pennsylvania and West Virginia, according to some market analysts.

The EIA said it expects Henry Hub spot prices this year to average $3.17/mmBtu, up by 26pc from the 2016 average and a 2.4pc increase from the agency's April forecast.