Natural Gas Production Rises in Feb, Keeps Strain on Prices

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By Nilanjan Choudhury

The supply glut from the shale drilling bonanza meant that February was another month when U.S. natural gas production from the Lower 48 states kept growing.

As per the latest report from Bentek Energy – the forecasting unit of Platts – February natural gas production was up 1.3% from January to 72.3 billion cubic feet per day (Bcf/d), just 0.5 Bcf/d shy of the highest monthly average ever. In fact, the February output was 10.5% higher year-over-year.

Thanks to the emergence of major shale plays yielding impressive results, Bentek analysis further suggests that average domestic natural gas supply will climb to 73.2 Bcf/d in 2015. To put things in perspective, U.S. production was averaging just 55.1 Bcf/d in 2009, only six years back.

The Shale Revolution

Over the last few years, a quiet revolution has been reshaping the energy business in the U.S. The success of ‘shale gas’ – natural gas trapped within dense sedimentary rock formations or shale formations – has transformed domestic energy supply, with a potentially inexpensive and abundant new source of fuel for the world’s largest energy consumer.

With the advent of hydraulic fracturing (or fracking) – a method used to extract natural gas by blasting underground rock formations with a mixture of water, sand and chemicals – shale gas production is now booming in the U.S. Coupled with sophisticated horizontal drilling equipment that can drill and extract gas from shale formations, the new technology is being hailed as a breakthrough in U.S. energy supplies, playing a key role in boosting domestic natural gas reserves.

As a result, once faced with a looming deficit, natural gas is now available in abundance.

Growing Demand Supply Imbalance Pressurizes Price

While February becomes another month in terms of growing natural gas output, the commodity’s demand has failed to keep pace with this rapid supply surge. Industrial requirement has been lackluster over the past few years with demand barely rising.

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