Rystad Sees US Gas Output Bottoming in November
Norwegian consultancy Rystad Energy said May 19 it expects US natural gas production to bottom out at about 82.5bn ft3/day in November before gradually recovering to about 84.5bn ft3/day by the end of 2021.
“We expect that gas production will decline every single month until November in our base-case scenario,” Rystad said. “This assumes a gradual reactivation of producing fields and is based on what curtailments we realistically see happening, rather than taking a basin-wide analogical approach.”
To put the decline into perspective, Rystad said lower 48 production in the US (excluding the Gulf of Mexico) had already dropped to 88.9bn ft3/day in April from 94bn ft3/day in November 2019. May output is expected to average about 86bn ft3/day, it said.
Artem Abramov, Rystad’s head of shale research, pointed out that curtailments by oil-focused producers – reaching as high as 2mn b/d according to some estimates – were also expected to impact associated gas production.
However, he said, “associated gas production is not declining as quickly as the market had hoped for so far.”
Most of the 11.5bn ft3/day year-on-year output reduction through November will reflect natural reservoir decline, he said. Only about 1.7bn ft3/day of that total will result from production curtailments.
Rystad’s forecast is based on a gradual recovery of the benchmark WTI crude oil price towards $35/b and the benchmark Henry Hub gas price towards $2.50/mn Btu in the first half next year. In May 19 trading, the June contract for WTI was trading at $32.49/b mid-morning, while the June contract at Henry Hub was at about $1.81/mn Btu.