Tuesday, November 29, 2011

Natural Gas Monthly Update

Monthly Natural Gas Production
Dry Natural Gas Production increased by 10.8% YoY as of September, 2011. The graphs above and below help illustrate the vast amount of natural being produced in the U.S, largely driven by production from shale formations in Texas, Oklahoma, and the Rocky Mountains.  Dry natural gas production is at its highest level since 1973.

U.S. Natural Gas Production

Above, you can see how the striking increase in natural gas production has led to an oversupply and depressed prices. Average daily production has increased by 120% since 2000.  A few numbers that stood out were Louisiana's 38% increase in natural gas production, which can be attributed to the Haynesville Shale.  Louisiana now makes now makes up 12% of U.S natural gas production, up from 10% in 2010. Fed offshore production in the Gulf of Mexico declined by -18.3%, as companies shift to onshore resource plays.The low prices have led many E&P companies to flare the natural gas that's associated with oil production as the cost for transporting and storing the gas just isn't profitable.  Over 35% of the natural gas produced in North Dakota is flared or otherwise not marketed. Production from the Bakken has increased 20-fold since 2007.  In 2009, less than 1% of US natural gas was vented or flared. This is also due to the fact that infrastructure in the Bakken hasn't been able to keep up with the pace of production.

2011 Monthly U.S Natural Gas Consumption
YTD natural gas consumption has only increased 2% YoY, while production increased 6.7% during the same period.

LNG Imports
As a result of the growth in natural gas production significantly outpacing the growth in consumption, net imports declined by 3% to 2.6 trillion cubic feet in 2010. Falling imports from Egypt and Trinidad were partially offset by first time imports from Peru and Qatar helped offset the decline. Pipeline imports from Canada make up about 88% of total imports. Recently, the U.S has began to re-export LNG, which are shipments of LNG to foreign countries that were previously imported, unloaded onto above ground storage tanks, and then reloaded onto to tankers to be delivered to other countries like Japan, South Korea, and the UK. Re-exports made up 6% of U.S LNG exports in 2010. Here's a link for more info on imports and exports:  http://www.eia.gov/naturalgas/importsexport/annual/index.cfm

U.S Natural Gas Inventory
Since natural gas is mostly used in the winter and stored in the summer, inventories fluctuation. Notice the upward trend in inventory levels over the past decade as production has increased 

Natural gas rigs working in the U.S. were 856, down 11% from the same time last year.