Henry Hub natural gas prices may average under $2/MMBtu next year as a result of booming production, swiftly growing stockpiles and only seasonal demand from exports, according to IHS Markit’s Samuel Andrus, executive director of North American natural gas.

Current Lower 48 production is roughly 2-3 Bcf/d long when set against demand, and needs to fall for prices to rebound, Andrus said at the LDC Gas Forums Midcontinent Conference in Chicago on Tuesday. Current production totals near 92 Bcf/d, but needs to gear down to 90 Bcf/d in 2020 to offer some price relief, Andrus said.

“We found that if you completely shut off all drilling, you get a 6 Bcf/d decline in the first quarter. With 70% decline rates in the well in the first year, it doesn’t take a huge pull back, but it does require that you don’t keep adding – get to more of a maintenance type of budget,” Andrus said.

The price forecast by Andrus is lower than federal assumptions and some independent analyst expectations. The Energy Information Administration (EIA) recently revised its 2020 forecast for Henry Hub spot price to $2.55/MMBtu. Goldman Sachs expects average prices to be $2.50/MMBtu in 2020-2021. Fitch Ratings assumption is set at $2.75/Mcf for this year and beyond. BTU Analytics LLC is forecasting an average of $2.65/MMBtu for the coming year.

Production control would most likely take place at the wellhead and manifest in tamer initial production rates, Andrus noted. Before discipline shows up in the form of reined in production growth, there will likely be more bankruptcies.

“We are likely to see increased bankruptcy reorganization amongst gas-focused producers in 2020,” he said.

Upstream bankruptcies are on the rise, according to a recent analysis by Haynes & Boone LLC. Year-to-date as of mid-August, 26 North American exploration and production companies had filed for bankruptcy, compared to 28 total last year and 24 in 2017.

In addition to supply boosts from production, underground storage inventories are likely to exceed 4 Tcf in 2020, Andrus said, adding to the long supply dynamic. However, with no deficit to fill, injections into storage will likely be 1 Bcf/d lower in 2020 than they were in 2019.

Total Lower 48 working gas in underground storage stood at 2,941 Bcf as of Aug. 30, 383 Bcf (15%) above year-ago levels but 82 Bcf (minus 2.7%) below the five-year average, according to EIA.

U.S. liquefied natural gas exports won’t be enough to offset projected domestic supply growth because there’s currently a global excess, said Andrus.

A potential price recovery in 2021 depends, instead, on how U.S. producers respond to the supply-demand balance in 2020.