EIA revises 2017 gas production outlook higher
Houston, 8 August (Argus) — The US Energy Information Administration (EIA) today revised its 2017 natural gas production outlook slightly higher, a sign that recent increases in drilling could accelerate output growth.
Dry-gas output, which excludes volumes lost during production and processing, should average 73.48 Bcf/d (2.1bn m³/d), up by 1.6pc from a year earlier and an increase of 0.2pc from the July forecast, the EIA said today in its monthly Short-Term Energy Outlook.
US gas market participants are keeping a close eye on government production data for indications that output is recovering from year-earlier levels because of higher prices. Daily prices at the Henry Hub last month averaged $2.96/mmBtu, up by 6pc from a year earlier. The US rig count during that same period has increased to an average of 953, more than twice the year-earlier level of 453, according to oil field services provider Baker Hughes.
The ramp up in drilling so far has failed to result in a year-over-year production gain. Dry-gas production in May rose to 71.9 Bcf/d, up by 0.3pc from April but down by nearly 1pc from a year earlier, according to the most recent EIA data.
The agency also revised its inventory outlook lower amid small gas storage injections in July. The EIA said it expects gas stockpiles to exit the injection season on 31 October at 3.905 Tcf, down by 0.9pc from its prior outlook but 1.1pc higher than the five-year average. US stockpiles hit an end-of-season record of 4.021 Tcf last year and rose to an all-time high of 4.047 Tcf in November 2016.
Injections into US gas storage in the four weeks ended 28 July totaled 122 Bcf, or 45pc smaller than the five-year average. Inventory builds have trailed average levels this year on rising gas exports and lower production.