Appalachian Basin Produces More Natural Gas Than Any OPEC Country

Appalachian Basin natural gas production has risen by 200% in the past five years. The region’s gas production now ranks ahead of all but two countries in the world.

Last week in one of their daily Today In Energy columns, the Energy Information Administration highlighted the tremendous growth of natural gas production in the Appalachian Basin:

Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017.

This 200% increase in Appalachian natural gas production since 2012 has had significant implications in the U.S. market. It has driven down costs for consumers, is fueling a renaissance in the chemical manufacturing industry, and has helped push coal-fired power plants out of business.

Most people likely have no perspective of just how much gas production is now coming out of the Appalachian Basin, so I thought I would illustrate.

According to EIA data, the Appalachian Basin produced 22.1 Bcf/d of natural gas in 2016. Here is how that compared with natural gas production in various regions and countries of the world last year:

Natural gas production around the world in 2016. Data from the 2017 BP Statistical Review.

Only one country in the world other than the U.S. — Russia — produced more natural gas last year than the Appalachian Basin. In fact, the Appalachian produced more gas than even entire continents like Africa and South America. The region also produced more natural gas than any OPEC country.

However, there are some warning signs on the horizon. The EIA reports that production from new wells in the region has been on a downtrend since early 2016:

New well productivity in U.S. shale gas plays.

So far this hasn’t affected production in the region because new wells are being drilled fast enough to compensate for the downtrend. But this is an early indicator that the sweet spots are being exhausted, which foreshadows a production decline in the Appalachian Basin.

However, the surge in U.S. oil production that will likely continue in 2018 will bring with it more natural gas production, and that should help natural gas production continue to grow through 2018. (See Natural Gas Outlook For 2018).

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6 thoughts on “Appalachian Basin Produces More Natural Gas Than Any OPEC Country”

  1. I agree with your warning signs statement. The US is increasing gas exports almost at the same rate that it is increasing gas electric power generation. We know that gas from shale or conventional wells is a non-renewable resource. The trend towards a very heavy reliance on gas which is now cheap may not be wise when gas floats to a world price. But life is good for now anyway.

  2. There was some pretty intense high grading going in 2016 when gas prices were in the dumps. Rig count in the App has more than doubled from low point of high 30s in mid 2016 to high 70s now. (see Excel spreadsheet on DPR site.) But rig productivity only dropped about 10% since then and is tailing off to flat if you look at last few months. Given this, I think they are doing fine.

    1. Also, see this analysis:

      year avgwell #wells >2MM@6mo percent
      2010 559 596 5 1%
      2011 563 1,006 13 1%
      2012 612 1,334 33 2%
      2013 829 1,349 86 6%
      2014 980 1,188 96 8%
      2015 903 998 65 7%
      2016 1,135 664 90 14%
      2017part 1,453 154 37 24%
      2017extrap 1,453 616 148 24%

      This includes all PA hz wells as of AUG 2017 and looks at wells with 6 months of history (so includes JAN and FEB wells in 2017). Defining a “big” well as one that cums 2 MM by 6 months, you can see that not only the percentage of big wells has gone up (from 1% to almost a quarter now, but the absolute number/year has gone up even in the face of lower activity.)

  3. Too bad Trump’s “America First” policies don’t extend to domestic fossil fuel exports — not that I thought they ever would.
    I guess we’ll just have to get accustomed to fighting deficit-financed wars for the rest of the century whenever foreign supplies are threatened.

    1. Fossil fuels are commodities and export makes sense in many cases. With dollar hegemony in place, the U.S. is the de facto world’s police force. Like anything, the desirability of these situations can be debated.

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