The U.S. Energy Information Administration recently released its Short-Term Energy Outlook, which forecasted the total natural gas production in the nation would reach 73 billion cubic feet a day (Bcf/d) for the first time this year.
The achievement would be from the help of new pipelines that are now connected the Marcellus shale, which would help transport more resources across the Northeast. Since 2013, the total marketed gas output from the lower 48 states will grow by 4 percent, which will set a new record for the fourth year in a row, the EIA reported.
Originally, the production estimates were closer to 72.26 billion from the last month's estimates, but the new pipeline production in the Marcellus has experts believing the number could be much higher.
The 2014 price outlook didn't alter from its original estimation of $4.74 per million British thermal units, mainly from the price being offset from the increase in gas use. According to the EIA, gas inventories dropped in March to an 11-year low since the winter was one of the coldest for many areas in the nation.
“They show a pretty sizable increase this year and definitely a larger increase than what they envisioned,” said Teri Viswanath, the director of commodities strategy at BNP Paribas SA, Bloomberg reported. “We've gotten used to such increases in supply but with such a shortfall in inventories, it probably is not enough to lower prices.”
Luckily, the forecasted record production will help gas inventories increase to 3.424 trillion cubic feet by November, the EIA added. However, it would be the lowest level since 2008 for total reserves at the peak-demand heating season.
“Unless we see production gains out of the Haynesville or Permian Basins, which aren't constrained, the new sources of supply are constrained and we will not likely see another production surge until later in November,” Viswanath added, according to Bloomberg.
Demand on the rise
The industrial, commercial and residential fuel demand from electricity generators is expected to grow by 1 billion cubic feet per day, which would average 66.26 billion cubic feet , the EIA reported. The three consumers make up for more than 90 percent of the total gas use in the nation.
The EIA stated that increases in drilling technology through hydraulic fracturing have made it much more affordable to explore shale formations for energy resources. Specifically in the Marcellus shale, July's production is estimated to reach 15 billion cubic feet per day, which would be 26 percent higher than July 2013.