According to the US Energy Information Administration’s (EIA) latest Natural Gas Production Report, natural gas gross withdrawals in the Lower 48 states fell in 2016, averaging 80.39 billion cubic feet per day (Bcf/d) - or 1.03 Bcf/d (1.3%) lower than in 2015.
After declining throughout 2015, natural gas prices began to recover in 2016, increasing through much of the year, which drove production increases in the second half of 2016. Natural gas gross withdrawals increased in August and November 2016 as Henry Hub natural gas prices rose from an average of $2.00/MMBtu in the first quarter of 2016 to an average of $2.88/MMBtu in the third quarter of 2016. The EIA expects natural gas prices to increase further in 2017 and 2018.
On a regional basis, annual natural gas production increased from 2015 to 2016 in Pennsylvania and Ohio, reflecting higher production from the Utica and Marcellus shale plays (see chart). The EIA said that in Ohio, natural gas production in the Utica Shale, including the Point Pleasant formation, has continued to increase since 2011 because of increases in production efficiencies and favourable geologic conditions. Efficiency improvements in horizontal drilling and hydraulic fracturing in the Marcellus Shale have also driven natural gas production increases in Pennsylvania and West Virginia. Outside of the Marcellus and Utica regions, annual natural gas production fell because of lower prices.