Natural gas production in the United States (US) is headed for decline to some extent this year as a result of freeze off condition, stated a recent market analysis by London based Barclays.Unfortunately, well freeze off will continue to muddle production data and obscure underlying trends in the next two monthly data releases.
The sharp declines reported for December and January are largely a result of adverse weather effects and are not an accurate reflection of underlying production trajectory, the report added.
US monthly natural gas production continued to be affected by freeze-offs in January
Gross withdrawals of gas in the Lower-48 fell by 670 MMcf/d m/m in January, a smaller drop than the 1 Bcf/d m/m decline indicated by pipeline scrape projections.
This is the first time production has declined on a y/y basis (-590 MMcf/d) since February 2010. However, both months in reference have been affected by production freeze offs.
Production fell across most of the regions that the EIA breaks out from the total Lower-48. Most of the January production decline came from a drop of output in Louisiana (-270 MMcf/d m/m), New Mexico (-180 MMcf/d m/m), and Wyoming (-190 MMcf/d).
Freeze offs have likely caused some of the declines in New Mexico and other regions in the Rockies. Texas is now exhibiting the fourth consecutive month of declines, although the decline in January was a moderate 70 MMcf/d m/m, compared with a 240 mmcf/d drop m/m in December.
Notably, production in “other states”, exhibited the largest gains and grew by 130 MMcf/d m/m, reversing the declines exhibited in December.
December 2012 total US gross withdrawals were revised higher by 70 MMcf/d, mostly as a result of revisions for the Gulf of Mexico. Lower-48 onshore production in December was revised down by 90 MMcf/d.
Source: Barclays