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    US Gas Production Poised to Fall in 2020: EIA


Permian and Appalachian regions will lead declines

by: Dale Lunan

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US Gas Production Poised to Fall in 2020: EIA

After averaging a record 92.2bn ft3/day in 2019, US dry natural gas production is expected to slip 2.6% in 2020 and average 89.8bn ft3/day for the year, the US Energy Information Administration (EIA) said in its May 12 Short-Term Energy Outlook (STEO).

Monthly production will fall to 85.4bn ft3/day in December from April’s average of 93.1bn ft3/day, the agency says, with the Appalachian region in the northeast and the Permian basin in Texas and New Mexico seeing the largest declines.

“In the Appalachian region, low natural gas prices are discouraging producers from engaging in natural gas-directed drilling, and in the Permian region, low oil prices reduce associated gas output from oil-directed wells,” the EIA said in its STEO, which is released monthly.

Production will continue to fall in the first half next year, the EIA said, to average 84.9bn ft3/day, but will increase again in the second half as prices recover.

The US benchmark natural gas price at Henry Hub averaged $1.73/mn Btu in April, the EIA said, but will trend higher for the rest of this year as US production declines. The price at Henry Hub will average $2.14/mn Btu this year and increase further in 2021, to reach an annual average of $2.89/mn Btu.

Domestic consumption of gas this year will slip 3.9% from 2019, the EIA forecasts, as industrial demand drops 7.1% as a result of lower expected manufacturing activity. US LNG exports will average 5.8bn ft3/day in Q2 2020 but will slip to 4.8bn ft3/day in Q3 2020 as global demand for natural gas slips.