Increased U.S. Natural Gas Production in 2015 will Affect Gas Price in 2016 Says Westfall
The country has been blessed with abundant gas production this year compared to 2015.This resulted to low prices which make it hard for drilling companies to finance their daily operations. According to the country’s Energy Information Administration, there will be 5.4% total output of natural gas for 2015 compared to the year preceding it.
The increased natural gas production is good news to the consumers since it is expected that prices will lower down too. However, the opposite is true for an oil and gas company who is doing business for a profit.
“The effect on the price for increased natural gas production can be felt by 2016”; said Lynn Westfall; the Director of Energy Information Administration’s Office of Energy.
Despite aggressive drilling done by gas companies, this is what Lynn has to say about the flow of gas production; “We are seeing a slowdown”.
In May, the country produced 45.6 billion cubic feet per day in areas including Pennsylvania which is touted to be the country’s biggest gas field. However, there is a fall of output in September to 44.9 billion cubic feet.
The country hosts various shale formations located in different States. Among these are Eagle Ford in Texas, Bakken in North Dakota, Haynesville in Louisiana as well as Texas, Utica in Ohio and Permian in Texas.
EIA did its report calculation by doing production estimates on the country’s newly drilled wells with its existing wells.
“With the significant drop in the country’s rig counts beginning the last quarter of 2014 in every shale regions and significant reduction in the legacy well’s production, increased production will less able to offset lower rig counts completely resulting to the decline of legacy well”; stated by EIA report.
However, the decline in gas production will not have significant effect on the EIA’s projection of gas production in the country as a whole adding the gas produced in the Gulf of Mexico and conventional onshore wells. As a matter of fact, gas production heightened at 4 billion cubic feet a day in August alone. With 78.7 billion cubic feet gas production per day, 2015 gas production is still much higher compared to 2014.
However, Westfall warns everyone not to be very complacent about the increasing gas production when she said; “The report of the country’s gas production can be very good for that. But take note that anything can happen couples of months after that”.