US gas production rose 2% in the second quarter as the low-growth, high-price environment persists – Low Calorie Diets Tips

highlights

Output up 1.9 Bcf/day, led by Haynesville, Appalachia

Henry Hub cash price will average $6/MMBtu in 2022

Most manufacturers are leaving the forecast for the 2022 fiscal year unchanged

Second quarter production increases from Haynesville, Appalachia, Permian and SCOOP-STACK recently increased US natural gas production by nearly 2 Bcf/d and helped ease supply constraints in the US gas market. However, based on the latest forecasts from producers, further increases in production expected for the remainder of 2022 are unlikely to provide end users with an overnight solution to high gas prices.

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In June, US natural gas production rose to an average of 94.5 Bcf/d, up nearly 1.9 Bcf/d, or about 2%, compared to a first-quarter average of 92.6 Bcf/d, as reported Show data from Platts Analytics.

Much of the recent increase in production has come from Haynesville, where production has increased by nearly 600 MMcf/d since March while rig count has climbed to over 70 – the highest in a decade, according to data from Enverus. Combined profits from Marcellus and Utica for the same period were approximately 420 MMcf/d. Third is Permian growth with gains totaling about 380 MMcf/d since March followed by the SCOOP STACK where production is up 280 MMcf/d.

Coupled with smaller gains from other basins, US production has made a slow but steady comeback in the second quarter after falling sharply in the new year from highs of 96 Bcf/d in late 2021.

Recent increases in output have been welcomed by industrial end-users, utilities and other budget-conscious consumers, who have suffered as Henry Hub’s cash price has averaged nearly $6/MMBtu this year, data from S&P Global Commodity Insights shows. However, with further production increases expected to deliver low-single-digit growth, relief from high gas prices is unlikely to be seen until mid-2023, or possibly later.


Prices

Following an unforeseen shutdown at Freeport LNG in mid-June, benchmark US gas prices in the spot and futures markets have recently fallen sharply to the upper range of $6/MMBtu, giving consumers some respite from prices that hit late May and briefly exceeded $9 in early June.

On June 21, the Henry Hub Balance 2022 forward curve settled at an average of $6.80/MMBtu, compared to $8.18/MMBtu just a month ago. While the short-term curve has weakened significantly, prices have changed little as of Q2-2023. At the end of June, Henry Hub’s contracts from April 2023 to December 2023 are now priced at an average of $4.92/MMBtu, up from an average of $4.87 a month ago, according to Platts’ latest M2MS forward price estimates.


production

The futures market’s expectation of longer-lasting higher gas prices comes as many U.S. gas producers continue to forecast flat, or at best marginal, production growth in 2022. At the latest earnings announcements for the first quarter of 2022, some of the largest U.S. natural gas producers left the company’s full-year guidance nearly unchanged, including Antero Resources, Coterra Energy, EQT, Range Resources and Southwestern Energy. Among the top dry gas producers, only Chesapeake Energy forecast significant growth in 2022 with an expected increase in full-year 2022 production of 500 MMcf/d over the first quarter.

The story was similar among major oil producers, with Chevron and ExxonMobil among the few Permian Basin producers forecasting significant year-over-year growth in 2022.

At Chevron, CEO Mike Wirth announced the company’s record first-quarter Permian production on the company’s recent quarterly conference call and said it would raise its full-year guidance for its Permian production to 700,000-750,000 boe/d in 2022, nearly 20 % higher than the average of 608,000 boe/d in 2021. At ExxonMobil CEO Darren Wood continues to forecast a 25% annual growth rate for its own Permian production this year, after producing from 460,000 boe/d to 560,000 in late March 2022 boe/d was raised in the fourth quarter of 2021.

For many of their Permian Basin peer producers, full-year oil and gas production forecasts remained unchanged or were revised only slightly upwards on the release of first-quarter results. Companies forecasting maintenance or growth in the low single digits included ConocoPhillips, Continental Resources, Ovintiv, Pioneer Natural Resources and Diamondback Energy, among others.

According to Platts Analytics, combined gains in dry and associated gas production could take US production to the high 97 Bcf/d range by the end of the fourth quarter — a gain of about 3 Bcf/d, or 3%, over current production .

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