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GOM Surprises as Only U.S. Region in January With Natural Gas Output Gains, Says EIA

The Gulf of Mexico (GOM) was the only region in the United States to register natural gas production growth in January, the Energy Information Administration (EIA) reported on Tuesday.

Federal GOM gas output increased to 109,106 MMcf/d in January from 104,641 MMcf/d in December, according to the latest Natural Gas Monthly. Gas production in the region has risen 8% from January 2014, when output totaled 100,572 MMcf/d.

Preliminary dry gas production for January 2015 was estimated at 2,287 Bcf, or 73.8 Bcf/d, down from December's record high of 74.8 Bcf/d. January's production rose 8.8% from a year ago to 6 Bcf/d from 67.8 Bcf/d. Preliminary estimates put total consumption in January at 3,130 Bcf, or 101 Bcf/d, a decrease of 3% from a year earlier.

All the states reported gas production fell in January from December, with the biggest fall off  in the Other States category, which includes Pennsylvania and Ohio. Total gas output month/month fell to 989,798 MMcf/d from 1,009,876 MMcf/d. In January 2014, Other States output totaled 826,310 MMcf/d.

Texas also reported a big drop month/month to 676,996 MMcf/d from 685,044 MMcf/d. Production in January 2014 averaged 645,779 MMcf/d.

The latest EIA report "feels more like January 2000 as the only region to register growth was the GOM," said analysts with Tudor, Pickering, Holt & Co. (TPH).

Overall supply was down an estimated 1.2 Bcf/d month/month, with the GOM seeing a 0.15 Bcf/d gain, while Texas output fell by 0.3 Bcf/d and the Other States were off by 0.7 Bcf/d to lead the declines, analysts added.

January's weather-related production issues could have caused the decline in the onshore, "but the breadth of the declines (i.e. all onshore regions) should begin to shake off gas market apathy," the TPH team said. "Also chipping away at market malaise is leading-edge flow data, which suggests current supply is up 1 Bcf/d from January but still a bit below December '14 levels."

TPH analysts suggested that "the time to get bullish about U.S. natural gas is rapidly approaching."

Oklahoma's production in January declined to 199,454 MMcf/d from December's 201,686 MMcf/d. In January 2014, the state's gas producers were pumping out 186,124 MMcf/d. Louisiana gas output fell month/month to 162,260 MMcf/d from 163,589 MMcf/d and was down from year-ago output of 172,241 MMcf/d.

Wyoming gas production fell in January to 150,805 MMcf/d from December's 153,086 MMcf/d and from year-ago output of 154,184 MMcf/d. In New Mexico, production declined to 100,419 MMcf/d from 105,314 MMcf/d in December. The state's output in January 2014 totaled 103,242 MMcf/d. Alaska gas production was slightly down month/month at 31,246 MMcf/d from 31,612 MMcf/d. In January 2014, gas production totaled 31,062 MMcf/d.

The latest EIA report would appear to confirm production gains following several big startups in the GOM deepwater over the past few months (see Daily GPIMarch 23). Expect to see more gas output gains in the GOM this year as even more projects come online, including ExxonMobil Corp.'s Hadrian South prospect, which ramped up in March (see Daily GPIMarch 30). At full capacity, Hadrian South is set to produce 300 MMcf/d.

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