U.S natural gas production in the second quarter decreased an estimated 1.25-1.75% sequentially and declined 3-3.5% from 2Q02, while Canadian production was flat sequentially and dropped 3.5-4.5% from last year’s numbers, according to a survey unveiled Thursday by Lehman Brothers analyst Thomas R. Driscoll.

However, the report contrasts sharply with the gas supply outlook delivered by the Energy Information Administration (EIA) last week in its Short-Term Energy Outlook (see related story). The EIA expects gas production to grow 3% this year, driven by a resurgence in gas-directed drilling activity. It estimates second quarter U.S. dry gas production will increase 2.1% sequentially and 3.1% year-over-year. EIA also expects dry gas production to be up 2.9% for the year to 19.6 Tcf, compared with 2002.

The Lehman Brothers report surveyed 49 North American oil and gas producers that account for about 70% of U.S. and Canadian natural gas production volumes. Driscoll noted that the second quarter’s 1-4% North American gas volume decline “will keep upward pressure on prices. In the long run, rapidly rising imports of liquefied natural gas (LNG) could help plug the gap. However, the intermediate term outlook is for declining supply and strong natural gas prices.”

In the United States, estimated production for 45 companies totaled 27.2 Bcf/d. Before royalties, estimated at 18.75%, Driscoll estimated that the companies accounted for 33.5 Bcf/d in production, or 71% of total U.S. volumes. The Canadian survey covered 14 producers, who also account for 70% of total Canadian production.

Domestically, the biggest gas production loser year-over-year was Amerada Hess, which showed a 32% decline. Hess’ gas production also was off 10% from the first quarter. ATP Oil & Gas was off 28% from a year ago, but its gas production gained 35% over first quarter numbers. National Fuel Gas was down 20% from a year ago and 5% from the first quarter. Nuevo Energy and Williams were both down 18% from Q202, but while Nuevo’s second quarter production was 8% higher than the previous quarter, Williams’ gas production declined 10%.

Other big gas production declines in the United States year-over-year were experienced by El Paso Corp. and Vintage Petroleum, both down 17%; Murphy Oil, 16%; Swift Energy, 13%; BP, 12%; Noble Energy, 11%; and Unocal, 10%.

In Canada, ConocoPhillips showed the sharpest decline, off 22% from a year ago, with its estimated production in the second quarter standing at 556 MMcf/d compared with 715 MMcf/d a year ago. ConocoPhillips was also off 7% from the first quarter. Other Canadian producers showing year-over-year declines included Canadian Natural Resources, down 13%; Nexen, 7%; Devon Energy, 6%; and EnCana and PetroCanada, both off 3%.

However, there were several U.S. production gainers year-over-year as well, notably Pioneer Natural Resources, which far and away blasted past other domestic producers, jumping its gas production volumes up 139% from a year ago. Pioneer also increased its production from the first quarter by 47%. Pioneer’s estimated second quarter production was 500 MMcf/d, compared with 340 MMcf/d in the first quarter and 209 MMcf/d in 2Q02.

Also showing U.S. production gains were EnCana, which boosted its gas production 58% and also increased its production over first quarter numbers by 3%. Apache Corp. also gained year-over-year, with production up 35% and ahead of first quarter numbers by 26%. Westport’s numbers closely followed, up 34% from last year’s levels. Also boosting production from a year ago were Chesapeake Energy, up 30%; Nexen Inc., 26%; XTO Energy, 13%; and Spinnaker and Burlington Resources, both up 4%.

In Canada, Anadarko Petroleum Corp. showed a 19% gas production increase from a year ago, with an estimated 535 MMcf/d for the quarter compared with 451 MMcf/d a year ago. Also showing quarterly gains in Canada were Burlington, up 16%; EOG Resources, 7%; Apache, 6%; and Husky Energy, 3%.

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