Net production among all the major U.S. natural gas production basins will grow at a rate of better than 1% annually, or 2 Bcf/year, through 2020, according to a new report by Calgary, Alberta-based consultant Ziff Energy Group. The report, released last Monday, looks at 17 major gas-producing areas, including the Gulf of Mexico (GOM).

Some of the major mature areas like the GOM will continue a steady slide downward, but many of the surging shale plays will more than make up for that, according to Ziff’s Bill Gwozd, senior vice president.

The price assumptions behind the production growth projections are the same ones Ziff has been using for several years, calling for modest, but no spiked, increases, Gwozd said. Ziff projects prices will exceed $5/Mcf by 2020.

While the GOM, which once accounted for nearly one-quarter of all U.S. gas supplies, will be “ground downward to a whisper of itself,” Gwozd said the latest Ziff report by two of the firm’s gas experts calculates that production in the Midwest and Appalachian regions will become some of the strongest in North America.

Gwozd said the GOM is the largest declining area while Appalachian areas are the biggest forecasted production growth areas. “GOM is the yin and Appalachia is the yang in U.S. gas production.” As an example, Ziff’s analysis shows that GOM production that was about 10 Bcf/d in 2000 could be less than 2 Bcf/d in 2020, Gwozd said.

“With the shrinking of some and the growing of others, we still see [in the report by Lev Virine and Simon Mauger] overall gas production growth, meaning that North America will not have to import the large quantities of gas that were being forecast as recently as five years ago.”

The report identifies “hot spots” where production, rig counts and efficiency will be rising and also the areas that are going to trend downward over the next seven years. The GOM Continental Shelf region is a leading area of decline while the Utica, Marcellus, Haynesville and Eagle Ford plays will be the high-growth areas, said Gwozd.

Ziff’s 17 basins in some cases are a blending of a whole region, so the report’s “Rockies” includes Piceance, Green River, Powder River, etc. The report identifies what its authors call sub-basins within the broader regions. What they label as “Appalachian” includes both the Utica and Marcellus.

In the Texas-Louisiana region without the Haynesville Shale, production would be in decline, but with it, the broader area shows continued growth, Gwozd said. With these variations, prices will fluctuate, too, he said. “They can go up or down; it depends on locations.

“In North America as a whole, we think there are a lot of factors that are pushing gas prices up and a few factors pushing them down. Some of the factors pushing them up include the decline of conventional gas supplies, incremental supplies for power generation increasing demand, incremental gas for the Alberta oilsands projects, and industrial incremental gas demand is rising with the global price differential between North American supplies and the rest of the world.

“Pushing prices down are only a few factors, such as the emergence of shale gas, huge new supplies from this source, the continued development of more tight gas and the push for tight oil raising the production of associated gas.”

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