Awash In Natural Gas

Natural gas inventories are returning to normal, and prices have plunged in response.

But supply is more than keeping pace. Not only does production in the Appalachia Region continue to grow unabated, but the associated gas (co-produced with oil) in the Permian Basin has started to have a large impact on the natural gas market over the past year or so. Due to logistical constraints in the Permian Basin, this at times has led to significant flaring and even natural gas prices falling below zero at times in the area.

For perspective, current natural gas production in the Permian Basin is about 13 Bcf/d. That reflects a doubling of production there in just over two years, and is now second only to the Appalachia Region’s 31 Bcf/d.

I will close by pointing out that the Appalachia Region produced 13 Bcf/d – the current level of production in the Permian – in 2013. Permian Basin gas production isn’t growing quite as quickly as that in the Appalachia, but the resource potential suggests that both oil and gas production in the Permian will continue to grow for a number of years.

It seems inevitable that we are going to be awash in natural gas well into the next decade.

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