Natural Gas Supply Slide Show – July 2009 Data

The EIA released their 914 (gross withdrawals) data and their Natural Gas Monthly with data for the month of July 2009 today. Each month we prepare a slide show highlighting the key moving pieces of this of the U.S. natural gas production picture. Each month this year, we along with many analysts and traders have been left unimpressed with the declines demonstrated in the key producing regions and in the aggregate production data. Not this month. 

Key Takeaways and Caveats: Most of this is contained in the slide show that follows but for those of you who don't like pictures ... (Note, this post will be incorporated into the Wednesday post with additional data)

• Total production for the first time since May 2006 is down on a year over year basis without the aid of hurricane related shut ins.
  
• U.S. Lower 48 natural gas production was 58.9 Bcfgpd,
  
  • down 0.2 Bcfgpd from year ago levels.
    
  • down 0.6 Bcfgpd from June
    
  • Since the Spring 2009 peak, Lower 48 produciton is off 0.9 Bcfgpd (1.4%)
    
• Texas, the largest piece of the U.S. production pie (32% of production), continues to show noticeable declines
  
  • Texas production is down 1.5 Bcfgpd from its November 2008 peak (down 7%)
    
  • Production is donw 1.0 Bcfgpd since March 2009
    
  • Rigs have recently stabilized but I don't expect a meaningful bounce until gas prices are firmly above $6 / MMBtu.
    
  • Caveat: There are lots of drilled but not completed wells in Texas (100s) so expect to see a slower decline as prices creep higher and these wells are quickly turned to sales.
    
• Louisiana: Hockey stick action - Haynesville Shale completions continue to impress.
  
  • At 7% U.S. production, this is one of the few growth drives at current prices.
    
  • Company after company plans to hike their well count by the beginning of 2010, regardless (or nearly so) of prices (from HK's mouth today) but CHK and others are looking to add rigs despite low prices to get acreage into HBP status.
    
• Other States production is plateuing.
  
• Wyoming - production took a dive, numbers are probably in part related to crude shut ins that occured over the summer as the Bakken play bumped up against capacity and weak gas prices in late Spring. This probably bounces back a bit later this year.
  
• New Mexico - trending lower.
  
• Oklahoma - Blame NFX and FST and host of others for following their Woodford Shale success with a non shale horizontal play in the Granite Wash.

• Nutshell: The long awaited production declines are beginning to become more noticeable. As basis differentials shrink in various regions, it becomes clear that curtailments are not the only limiting factor in the recent smaller than expected weekly storage data.