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EIA Expects Decline in Natural Gas Production

EIA Expects Decline in Natural Gas Production thumbnail

graph of monthly changes in natural gas production in DPR regions, as explained in the article text

Source: U.S. Energy Information Administration, Drilling Productivity Report, August 2015

Natural gas production across all major shale regions in EIA’s Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells.

The DPR provides a month-ahead forecast of natural gas and crude oil production for the seven most significant shale formations in the United States. In order to estimate total natural gas production within a DPR region in a given month, production from both new wells and legacy wells must be taken into account. New-well production is estimated by multiplying estimated rig productivity by the number of rigs operating in the region, lagged by two months. Production from new wells is then compared to the anticipated production declines from legacy wells, which are typically based on well depletion rates, to estimate net production.

In any given month, new-well production depends on the number of drilling rigs and the productivity of those rigs and the wells added through their use. As rig counts fall, increases in rig productivity are necessary not only to compensate for the reduced rig total, but also for rising levels of legacy-well declines. Given the substantial drop in rig counts since the fourth quarter of 2014 in each of the DPR regions and growing declines in production from legacy wells, productivity increases are less able to completely offset lower rig counts and legacy-well declines.

graph of monthly natural gas production in DPR regions, as explained in the article text

Source: U.S. Energy Information Administration, Drilling Productivity Report, August 2015

The Utica region in eastern Ohio is the only DPR region expected to show production increases in June, July, and August. Production declines from legacy wells in the Utica are estimated to total 55.6 million cubic feet per day (MMcf/d) in September. Partially countering this decline is expected production from new wells of 52.2 MMcf/d in September. New-well natural gas production per rig is estimated to be about 7 MMcf/d, an increase of 47% from September 2014. Seven rigs were drilling in the Utica in July (the most recent data available). Multiplying the seven rigs by the estimated new-well gas production per rig yields the total new-well production estimate for September. Because this value is lower than the decline from legacy wells, total production is expected to fall by 3.4 MMcf/d.

A year ago, the higher number of rigs operating in the Utica meant that new-well production more than offset the 26.5 MMcf/d in legacy-well declines, resulting in a net production increase of 116.5 MMcf/d. Since then, falling rig counts and increasing legacy-well declines mean the increase in Utica new-well productivity is insufficient to overcome legacy-well production declines.

Several external factors could affect the estimates, such as bad weather, shut-ins based on environmental or economic issues, variations in the quality and frequency of state production data, and infrastructure constraints. These factors are not accounted for in the DPR. For example, on August 1, the Rockies Express Pipeline started to deliver 1.8 Bcf/d of Appalachian natural gas production west on its existing mainline as part of the Zone 3 East-to-West Project. This increase in takeaway capacity may encourage increased production from regions such as the Marcellus and Utica.

The DPR provides a very near-term forecast in specific plays based on the most current information. Longer term outlooks that include play-level detail, such as the Annual Energy Outlook, reflect resource and technology assumptions and projected prices and often move in different directions than the DPR, which reflects short-term factors.

Energy Collective

16 Comments on "EIA Expects Decline in Natural Gas Production"

  1. Nony on Wed, 26th Aug 2015 7:26 pm 

    The inventory is filled to average level. and low demand time. Thus low price. This turned production. Infrastructure bottlenecks hurt also. Associated gas down slightly in Texas (EF LTO reduction), but is up in ND (flaring and conditioning rules).

    Expect demand and price to rise in winter. Production will rise then. LNG export in LA will come on in winter also which will help.

  2. Makati1 on Wed, 26th Aug 2015 8:12 pm 

    No profit = no gas. Waiting for the new low, low, Walmart prices to go up is going to bankrupt the frakers and put the suckers … er … investors in the poor house. lol

  3. BC on Wed, 26th Aug 2015 9:11 pm 

    Makati, the word is “ivesuckers”. 😀

  4. coffeeguyzz on Wed, 26th Aug 2015 9:45 pm 


    You are amongst the few on this site who follows industry goings on, but you may (or not) be aware that the above article’s term ‘Utica region’ is already being dated by operational realities in the field.
    Specifically, the output of the dry gas Utica coming from BELOW the Marcellus in Tioga, Washington and Greene counties these past few months is posdibly being lumped in as Marcellus output.

    It is NOT.

    First EQT announced an abrupt shift away from Upper Devonian development following their recent 72.9 MMcf IP Scotts Run well (over 1/4 Bcf flowed in 8 days), but also Consol is mulling over putting the MARCELLUS behind the Utica in priority for future development. (Consol also had a recent Utica well flow 60 MMcf 24 hr IP).

    To put this in some perspective, the second largest gas formation on the planet, the Marcellus, as well as a 30 trillion cubic foot – recoverable – formation, the Upper Devonian, are being considered secondary and tertiary targets by two of the largest operators in the area.
    The EIA may NOT be counting the Utica gas as being from that formation as the wells are being drilled/produced on already existing Marcellus pads, thus potentially skewing the data.

  5. apneaman on Wed, 26th Aug 2015 10:34 pm 

    coffeeguyzz, how do you know that it’s only a few who follows industry goings on?

  6. Makati1 on Wed, 26th Aug 2015 11:34 pm 

    BC, thanks for the correction. ^_^

  7. coffeeguyzz on Wed, 26th Aug 2015 11:36 pm 


    Great question, and I sure am open to learning more.
    The past year or so that I’ve followed this site and its commenters, I have rarely seen input that was both accurate and relevant regarding the oil and gas industry … especially the ‘upstream’ aspect (exploration and production) which happens to be a keen interest of mine.

    Am I incorrect in thinking that?

  8. Nony on Thu, 27th Aug 2015 12:10 am 


    The EIA just has certain counties that they call Marcellus or Utica. There is definitely some chocolate in the peanut butter and some peanut butter in the chocolate. They companies are drilling Utica wells on Marcellus pads (a couple of the monster wells were on existing Marcellus pads). There’s also a bit of Marcellus drilling in Ohio. And then to complicate it more, you have conventional gas mixed in as well.

    A better EIA data source (than DPR) for the actual shale formations is here: (scroll to the bottom chart and then click underneath and you will get an excel spreadsheet). Note that this is dry marketed gas (so NGLs are excluded…another difference with DPR).

  9. Nony on Thu, 27th Aug 2015 12:12 am 

    The other thing is you have Upper Devonian drilling. Not just fluff anymore. EQT has pretty substantial drilling there. The simpler thing is probably to just treat it as the Appalachian region (all the shale horizons) in a way analogous to the Permian. If the Rogersville ever comes in (not sure it will…pretty deep and expensive) than just lump it in also.

  10. Nony on Thu, 27th Aug 2015 12:22 am

    Here are the FAQs. Read through and you will see the points about simple county boundaries (unable to differentiate Utica and Marcellus where stacked), will include shallow conventional production. Also the point about NGLs (oil is all oil and lease condensate, what is separated at the well). Gas includes NGLs and not just the C2-C4 but any plant condensate (C5+) since that is separated out downstream from the well.

  11. Apneaman on Thu, 27th Aug 2015 12:50 am 

    coffeeguyzz, I would not use the term incorrect. I think I see a great gap in what the different sides think is accurate and relevant. Accurate and relevant to what? Your position? My position? Also, I am not necessarily impressed just because someone throws a bunch of terminology, industry catch phrases and colorful graphs at me. Useful? Yes it can be but if not accompanied by a logical argument it is meaningless or can mean many things depending on how it is spun. The world is full of high paid over educated idiots that are jargon babblers who are clueless. If you think someone is unlearned because they do not use the accepted language I would suggest that you may be in error in that regard. Lot’s of money, power and politics in oil and has been for since day one and will continue to be til the last day – when ever that maybe. There is more to it than just the numbers. For example, I used to work in the industry building some of it and doing maintenance shut downs – refineries, tank farms, the Alberta tar sands, petro-chemical plants, etc and although that did not exactly put me in the front office, I bet you I learned a bunch of stuff you will never find in a textbook or website. Hoisted many a barley pop with some higher ups too and like most men they like to spend a bit of social capital and tell some stories they probably shouldn’t. Not the be all to end all, but another piece of the puzzle to go with my own experience, observations and extensive research. IMO one of the best sources that is available on this board is rockman. Oh I disagree with him on a worldview basis, but he has been brutally honest in revealing the type of people that are feeding us those numbers and his professional experience counts for a lot. I think it’s good to have some skepticism, but to not take into account who your dealing with and accepting numbers and industry interpretations at face value puts one at a big disadvantage when looking for the truth. As with everything for sale in this life – Caveat emptor or as rockman said the other day “were not your mommy”.

    Politics and the English Language

  12. Davy on Fri, 28th Aug 2015 3:29 am 

    Ape Man said “Accurate and relevant to what? Your position? My position? Also, I am not necessarily impressed just because someone throws a bunch of terminology, industry catch phrases and colorful graphs at me. Useful? Yes it can be but if not accompanied by a logical argument it is meaningless or can mean many things depending on how it is spun. The world is full of high paid over educated idiots that are jargon babblers who are clueless. If you think someone is unlearned because they do not use the accepted language I would suggest that you may be in error in that regard.”

    I think this is a key point to our age. We are not only overly complex and energy intensive physically we are in the same situation with our knowledge. Folks we do not need the degree of knowledge we have in multiple areas. This knowledge cost resources. If it is not relevant to our species survival then it is just another example of our species entropic decay.

    Back when I was the financial guy at the family business I had to get my insurance license. This industry has some idiotic terminology and industry language. I used to think it was this way to confuse and obfuscate legalized theft. Take many of our technical and scientific areas and we have a similar situation of huge amounts of knowledge, terminology, and group talk. There is really a limited amount of this knowledge we have created that is useful and meaningful. Much of the rest of it is just another example of a large brain out of control creating noise.

    As we move into a paradigm shift of descent we are going to see knowledge abandonment. This abandonment is going to be good and bad. We have made some tremendous progress with vital knowledge of ourselves and our environment. Some of this good knowledge will be lost. This abandonment happened with many of the most important subjects from our earlier history. This knowledge was of our skills of surviving in a non-industrial world.

    This knowledge abandonment was in a growth period. A similar situation is going to occur but without alternative structures of support. We are going to lose knowledge and skills that are fossil fuel based that were vital for survival. Our fossil fuel based life will end without alternative structures for survival. We have discarded much of the old non-fossil fuel knowledge and skill set that allowed our species to survive. It is still out there but not in the form it can be readily reproduced. It is hidden in libraries. It will need to be relearned and skill sets reestablished. We may not have the time nor the ability to scale this learning event.

    When I read Ape Man’s profound words above I thought of this. I laugh at the really smart people because I find there is a price to pay for being a specialist. Many of the specialist have so little breadth in their understanding. Flip through your satellite channels and see what there is of true value. I am talking profound value of survival of our species of our love ones. I can’t watch TV because most of it is noise. Much of the academics in the world today is noise. Many of the smartest people are deceiving themselves. Many think themselves smart because society has put a price on them.

  13. GregT on Fri, 28th Aug 2015 3:52 am 

    The only knowledge that was ever important Davy, is the knowledge that we have lost. We have never been in control of nature, nature has always been in control of us. We always had a responsibility to preserve nature for future generations, and life as we know it on this planet, but we traded that responsibility for selfishness, greed, and lust.

    Our understanding of the natural environment was never as important, as our respect for it should have been. As far as we have advanced in our ‘knowledge’, we still haven’t learned very much. Actually, it could be argued that we haven’t learned anything at all, and we will pay dearly for that.

  14. Davy on Fri, 28th Aug 2015 4:22 am 

    I agree Greg somewhere along the line our large brains opened the wrong door. Instead of choosing a spirituality of seeking truth in nature we chose to seek truth over nature. We now see the results. I have read so many spiritual text of the so called “ancients”. They talk about this fall from grace and innocents. They speak of the end of the world in this regard. It is the nature of knowledge and hubris to eventually lead to its own destruction.

    I have a spiritual connection to the Osage tribe because they once lived in central Missouri where my farm is. They were the last of our species in my local that lived spiritually and physically sustainable. Their culture had advanced to a point on both levels in a sustainable codependence with nature not against her.

    Anyway I have little hope for modern man. Possibly after the die off we will have a spiritual awakening but unfortunately on what kind of planet. It may be just a spiritual awakening into a planet heading for extinction of higher order life.

  15. GregT on Fri, 28th Aug 2015 4:37 am 

    Or Davy,

    Maybe all of that stuff that was written by the scholars of the day, so far back, was actually true. I’m guessing that we’re going to find out, one way or the other.

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