12/03/25
US gas producers gear up for return to growth
Firms have changed their tune since the start of the winter, as weather-related
factors have increased the appeal of boosting output, writes Julian Hast New
York, 12 March (Argus) — Some large US natural gas-focused producers plan to
boost their output in the coming years, in response to higher prices and booming
US LNG export capacity. This would reverse a years-long trend among US producers
of holding output steady to avoid oversupply, which drags down prices. The
largest producer of US gas by volume, Expand Energy, aims to lift production by
3.4pc from last year to 7.1bn ft³/d (201mn m³/d) in 2025 and to boost drilling
to bring on line 300mn ft³/d of sidelined production capacity that could hit the
market in 2026. Fellow US gas producer Comstock Resources plans to add drilling
rigs in the Haynesville shale of east Texas and northern Louisiana this year in
a bid to offset output declines triggered by low prices in 2024 and bring new
output on line when needed. US firm Range Resources, which operates in the
Appalachian region, expects to boost production by 19pc from 2024 to 2.6bn ft³/d
by 2027, with most of this growth set to take place in 2026-27, when the
majority of the planned new LNG export terminals on the US Gulf coast are slated
to begin operations. Range's sharp upward growth trajectory represents a break
from its recent past, given that its 2024 output was just 2.5pc higher than in
2020. US gas producers appear poised to raise output by about 2bn ft³/d combined
over the next 12-24 months, to refill inventories that have been depleted by a
cold 2024-25 winter season and to keep up with booming LNG exports, according to
investment bank RBC Capital Markets. But if every US gas producer grows at same
the rate that Range Resources envisages, "the macro backdrop could quickly
deteriorate", US bank Tudor Pickering Holt said in a note to clients last month.
US gas inventories were at an 80bn ft³ deficit to the five-year average at the
end of February, compared with a 215bn ft³ surplus on 1 November, according to
US government agency the EIA. US gas prices now have now climbed above the
marginal breakeven price of the industry, Expand Energy chief executive Nick
Dell'Osso says, putting the US breakeven US gas price at about $3.50/mn Btu.
This means "supply will ultimately show up and compete", he says. Expand Energy
and fellow US producer EQT, which made the same estimation of the industry
breakeven price early last year, say their own breakeven figures are lower
because of their ample acreage in the Marcellus and Utica shale formations of
Pennsylvania, Ohio and West Virginia, where production costs are lower. Nymex
gas futures prices at the US benchmark Henry Hub in Louisiana for delivery in
2026 settled at $4.38/mn Btu on 7 March, up from $3.91/mn Btu at the start of
this year. Fair-weather friend The recent growth plans of US producers stand in
contrast with many producers' reluctance to boost output earlier this winter, in
response to weather-driven shifts in supply and demand. "You don't want to grow
for a season" but rather "grow for something that is durable over several
years", Dell'Osso said in January. And the production plans of gas-focused firms
may end up being overshadowed by those of crude-focused players in the Permian
basin of west Texas and southeast New Mexico. These are set to remain the main
drivers of production growth in the coming months, thanks to new gas pipeline
infrastructure connecting associated gas supply to end markets near the US Gulf
coast. Total US marketed gas production is forecast to increase to 114.7bn ft³/d
this year and 117.9bn ft³/d in 2026, from 113.1bn ft³/d in 2024, the EIA says.
Permian basin output is expected to account for 75pc, or 3.6bn ft³/d, of the
additional production by 2026, with output from the basin increasing by 7pc/yr
in 2025-26. This would be slower than the 14pc/yr recorded in 2022-24 but would
still make it the US' fastest-growing production area. Send comments and request
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