U.S. natural gas production decreased a modest 0.2% sequentially in the first quarter from the final three months of 2006, suggesting that gas supplies are stabilizing, according to a survey by energy analysts with SunTrust Robinson Humphrey/the Gerdes Group.

John Gerdes and Michael Dane surveyed the 40 U.S. exploration and production companies they cover, which account for about two-thirds of U.S. output after considering royalties/working interests. Compared with 1Q2006, the analysts said production grew 2.8% in 1Q2007, reflective of hurricane-related recovery from 2005's storms.

The analysts' numbers confirmed other U.S. gas production surveys, including one by the Energy Information Administration, which reported a 1.6% sequential gain in gas output between 4Q2006 and 1Q2007.

"This survey...appears to suggest that relatively stable U.S. gas drilling activity may at best generate stable onshore gas production," Gerdes and Dane said. "Historically, our U.S. natural gas production survey has consistently understated U.S. gas production, yet lower emphasis on Gulf of Mexico (GOM) production and a reemphasis of the majors on North American gas development has helped align the survey with actual production trends in recent periods."

This year, given an expected average rig count of 1,475 rigs and a 7% decline in well productivity, "we anticipate an increase in U.S. gas production of approximately 0.8 Bcf/d," Gerdes and Dane wrote. They see onshore output increasing by nearly 1.3 Bcf/d while GOM production declines by about 0.5 Bcf/d.

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