In November 2023, the United States witnessed an unprecedented surge in dry natural gas production, reaching an all-time high of 104.9 billion cubic feet per day (Bcf/d) in the Lower 48 states (L48), as reported by S&P Global Commodity Insights. This marks a substantial 3.3% increase (3.3 Bcf/d) from the 2022 annual average. Over the first eight months of 2023, L48 dry natural gas production held steady at 101.5 Bcf/d before experiencing a notable uptick of 3.2 Bcf/d from September to November 2023.
Notably, 97% of the surge in U.S. dry natural gas production since September was concentrated in three key regions. The Appalachia region, the largest producer in the U.S., witnessed a robust increase of 1.5 Bcf/d during this period, attributed to expanded natural gas transportation capacity from the Marcellus shale in Pennsylvania and West Virginia. The Permian region, the second-largest producer, saw a 1.0 Bcf/d rise, primarily due to ongoing growth in crude oil and associated natural gas production. Furthermore, the Anadarko region in Oklahoma experienced a 0.6 Bcf/d increase from recent summer lows.
Despite this recent upswing, the growth rate in dry natural gas production for the first 11 months of 2023, at 3.3% (3.3 Bcf/d), lagged behind the 5.3% (4.9 Bcf/d) rate observed in 2022, according to data from S&P Global Commodity Insights. The December 2023 Short-Term Energy Outlook forecasts a continued increase in total U.S. dry natural gas production in 2024, expecting a 1.2% rise compared to 2023.
Price Movements:
Henry Hub Spot Price: The Henry Hub spot price experienced a 40-cent decline from $2.73/MMBtu last Wednesday to $2.33/MMBtu yesterday.
Henry Hub Futures Price: The January 2024 NYMEX contract saw a decrease of 23.4 cents, dropping from $2.569/MMBtu to $2.335/MMBtu. The 12-month strip average for January 2024 through December 2024 futures contracts also declined by 18.3 cents to $2.563/MMBtu.
Select Regional Spot Prices:
Natural gas spot prices at most locations mirrored the U.S. benchmark Henry Hub price this week.
Algonquin Citygate experienced the most significant decrease at $6.41/MMBtu, reaching $3.39/MMBtu due to above-average temperatures and decreased heating degree days in the Northeast.
West Texas, specifically the Waha Hub, saw an increase of $1.23, rising from $0.64/MMBtu to $1.87/MMBtu, with natural gas production in the Permian region witnessing a 1% decline this week.
International Futures Prices:
International natural gas futures prices decreased for the week, with LNG cargoes in East Asia averaging $15.77/MMBtu and TTF in the Netherlands averaging $11.73/MMBtu.
Natural Gas Plant Liquids (NGPL) Prices:
The NGPL composite price at Mont Belvieu, Texas, fell by 26 cents/MMBtu, averaging $6.66/MMBtu for the week ending December 13.
Supply and Demand:
Supply: Total supply of natural gas fell by 0.2% (0.3 Bcf/d), while dry natural gas production grew by 0.2% (0.2 Bcf/d) to a weekly average of 105.2 Bcf/d. Net imports from Canada decreased by 8.8% (0.5 Bcf/d).
Demand: U.S. consumption of natural gas rose by 4.4% (4.0 Bcf/d), with power generation, industrial sector, and residential/commercial sector consumption increasing by 3.0%, 1.2%, and 8.2%, respectively.
Liquefied Natural Gas (LNG):
Pipeline Receipts: Average natural gas deliveries to U.S. LNG export terminals increased by 3.9% (0.5 Bcf/d) week over week, reaching 14.6 Bcf/d.
Vessels Departing U.S. Ports: Twenty-eight LNG vessels departed the United States between December 7 and December 13, with a combined LNG-carrying capacity of 105 Bcf.
Rig Count:
The natural gas rig count increased by 3 rigs to 119 rigs, with the Haynesville adding 3 rigs. The total rig count, including oil-directed rigs, stands at 626 rigs.
Storage:
Net withdrawals from storage totaled 55 Bcf for the week ending December 8, with working natural gas stocks at 3,664 Bcf, 8% above the five-year average.
In conclusion, the U.S. continues to experience remarkable growth in dry natural gas production, setting a new record in November 2023, with expectations of further increases in the coming year. Price fluctuations and regional variations highlight the dynamic nature of the natural gas market, influenced by factors such as weather conditions and production activities.