EIA Forecasts Record Natural Gas Production In 2018. Yay?
January 25, 2018
The Energy Information Administration's latest short-term outlook, published on Tuesday, had an eye-catching prediction: U.S. oil output in 2018 would hit its highest level ever.
But this column isn't about that.
Instead, let's look at another record being broken: U.S. natural gas production.
[see original article for chart]
That 68 percent increase since 2005 is pretty remarkable on its own. What isn't clear from that chart is just how big a year 2018 is expected to be. Here's the same data, but showing the change each year:
[see original article for chart]
That extra 6.9 billion cubic feet of gas production expected in 2018 is like the U.S. adding the entire output of Turkmenistan -- one of the world's largest gas exporters -- in the space of just one year.
Two big reasons for this are logistics and oil. Pipelines able to carry roughly 7 billion cubic feet of gas a day away from the prolific Appalachian region are due to start up this year, allowing production that's been bottled up in the East to flood out. Meanwhile, rising oil production in the Permian shale basin and elsewhere will bring increased quantities of associated gas.
I wrote last week about how gas prices were strangely subdued despite the bitter cold gripping large parts of the U.S. These projections are a big reason. It is notable that the EIA's numbers incorporate estimates for lower gas prices this year and next compared to 2017. The cost structure of U.S. gas production has changed fundamentally.
The structure of supply and demand has also changed fundamentally, and in tandem. In the first decade of this century, the U.S. was short of about 9 billion cubic feet a day of gas, on average, relative to its consumption. Imports made up the difference. The latest projection from the EIA shows that this has almost entirely flipped...
See entire article at Bloomberg Quint.
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