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Thursday, July 16, 2015

EIA: Utica Shale Continues to See Increased Production as Other Plays Taper Off

From World Oil:
After four years of record supply, natural gas output is showing signs of weakness as producers pull back amid tumbling oil prices. 
Gas production from the seven largest shale basins will fall 0.6% to 45.1 Bcfd in August from a month earlier, the biggest drop since March 2014, the U.S. Energy Information Administration (EIA) said Monday in its monthly Drilling Productivity report. EIA estimates have shown supply declines since June. 
The government’s forecasts signal that the 51% collapse in crude oil prices since June 20, 2014, is reverberating in the natural gas market. As drillers shut wells in liquids-rich deposits from North Dakota to Texas, they’re also curtailing gas output from those reservoirs. That may prevent further price declines for gas, which has slid 37% since oil’s plunge. 
“Gas is being held captive by oil,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said by phone Monday. “Natural gas prices were artificially kept low by high oil prices.” 
Natural gas for August delivery rose 9.4 cents, or 3.4%, to $2.864 per million British thermal units Monday on the New York Mercantile Exchange, a four-week high. West Texas Intermediate crude fell 1% to $52.20/bbl. 
The estimated drop in gas output was led by the Eagle Ford shale, the biggest oil reservoir in the U.S., EIA data show. Gas supply there will slide 1.7% in August, while output from the Utica deposit in the Northeast, where propane and ethane help to subsidize gas drilling, is poised to climb 0.8%.






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