Natural Gas Production Reaches New Record Despite Low Prices

(October 7, 2019) — U.S. natural gas production continued to rise in August, setting a new daily production record of 92.8 Bcfd on Aug. 19, according to estimates by IHS Markit and as reported by the Energy Information Administration (EIA). Natural gas output also set a new monthly record in August, averaging more than 91 Bcfd for the first time.

In its Short-Term Energy Outlook released Sept. 10, EIA forecasts dry natural gas production to average 93.4 Bcfd from September through the end of the year. U.S. natural gas production increased by 7.1 Bdfd, or 8%, between August 2018 and August 2019, led by output gains primarily in the Northeast.

The agency notes that production has increased even as natural gas prices have declined. Natural gas spot prices at the national benchmark Henry Hub have been on a downward trend since early spring. Spot prices at other natural gas hubs across the country have continued to sell at discounts to Henry Hub.

Record growth in natural gas production continues to put downward pressure on prices. They have continued to fall this summer despite high levels of natural gas exports and increased consumption in the electric generation sector.

Henry Hub prices averaged $2.40/MMBtu in June and $2.37/MMBtu in July, the lowest monthly aver- ages for June and July since 1999, as growth in natural gas production continued to offset growth in consumption. In the September Short-Term Energy Outlook, EIA forecasts Henry Hub prices to increase through the remainder of the year, ultimately averaging $2.55/MMBtu in December.

(SOURCE: The Weekly Propane Newsletter, October 7, 2019. Available by subscription.)