U.S. Lower 48 gross natural gas production in June increased to 69.47 Bcf/d, up 0.1% compared with 69.39 Bcf/d in May, despite losses in the federal offshore Gulf of Mexico (GOM), Louisiana, Texas and New Mexico, according to data released by the Energy Information Administration (EIA) last week. Other EIA data released last week indicated that increased drilling in the Marcellus Shale has been a boost for gas production in the northeastern United States and both peak working capacity of underground storage and working design capacity increased about 1% between April 2010 and April 2011.

Total U.S. production in June was 77.85 Bcf/d, up 8.9% from a year ago when 71.42 Bcf/d was produced, according to EIA’s Monthly Natural Gas Gross Production Report.

The federal offshore GOM continued a six-month slide as production dropped 0.23 Bcf/d (4.3%) compared to May because of maintenance, construction and repairs, EIA said. Louisiana posted a 0.7% decline; New Mexico saw a 1.4% decline; Texas declined by 1.1%, and Alaska posted a 4.7% decline, falling to 8.28 Bcf/d in June from 8.69 Bcf/d in May. Oklahoma (5.21 Bcf/d, up 2.0% from May) and Wyoming (6.51 Bcf/d, up 1.4%) were the only individual states that posted production increases in June.

New wells that came online in the Marcellus Shale and North Dakota helped push the other states category up to 19.0 Bcf/d, a 2.5% increase compared with 18.53 Bcf/d in May, EIA said.

And increased drilling in the Marcellus has helped natural gas production to grow rapidly in the northeastern United States since 2009, according to a separate report issued by EIA last week.

The largest production gains have come in northeastern Pennsylvania, according to EIA, which said there have also been noticeable increases in southwestern Pennsylvania and West Virginia.

While production across the rest of the Northeast has remain virtually unchanged since 2007, northeastern Pennsylvania increased to more than 2 Bcf/d in July from 0.4 Bcf/d in January 2010, EIA said. Production in southwestern Pennsylvania increased more than three times (to more than 0.8 Bcf/d) and production in West Virginia increased more than 40% (to more than 1 Bcf/d) between the start of 2010 and July 2011, according to EIA.

Bentek Energy LLC estimates production in Pennsylvania and West Virginia at 4 Bcf/d, more than five times the 2004-2008 average, EIA said. Jack Weixel, manager of energy market fundamentals for Bentek, recently said he expects 4 Bcf/d of growth through 2015 in Pennsylvania alone (see NGI, May 23).

The EIA production data, combined with a recent U.S. Geological Survey (USGS) report, demonstrates that the Marcellus Shale is hardly the shrinking violet some mainstream media reports have claimed, according to the Marcellus Shale Coalition (MSC).

“Most importantly, the latest production estimates remind us that, more than ever before, the dialogue about the Marcellus Shale continues to be rightfully focused on the region’s leading role in providing clean-burning, job-creating American energy for our nation,” MSC said.

The USGS assessment estimated that approximately 84 Tcf of undiscovered, technically recoverable natural gas and 3.4 billion bbl of undiscovered, technically recoverable natural gas liquids (NGL) are contained in the Marcellus (see NGI, Aug. 29). It was the first USGS estimate of the Marcellus since 2002, when the agency estimated about 2 Tcf of gas and 10 million bbl of NGLs. Production and technological development in the intervening years yielded geologic information and engineering data, which prompted USGS to significantly increase its estimate, according to the agency.

After some initial confusion about the USGS assessment, including media reports that it would result in the United States slashing Marcellus gas estimates 80%, the USGS clarified the differences between its results and previous EIA numbers (see NGI, July 11). The “slashing” reports misunderstood the differences between the USGS and EIA estimates, according to USGS geologist Jim Coleman, and were the result of reporters “not doing an adequate job of due diligence for a number of reasons,” according to Terry Engelder, a geosciences professor at Pennsylvania State University.

Production growth in the Marcellus and other shale plays “continues strongly,” according to Navigant Consulting. “Growing shale gas supply is the key driver behind all North American gas market developments. In fact, at this point it seems clear that factors are in place to sustain a structural surplus that will pressure natural gas prices for the foreseeable future, much beyond the remaining portion of 2011.”

EIA also reported last week that peak working capacity of underground storage for the Lower 48 was an estimated 4,103 Bcf in April, up 1% compared with 4,049 Bcf in April 2010. Working design capacity also increased by about 1%, to 4,388 Bcf, EIA said.

Peak working capacity is based on actual peak storage volumes, while working design capacity is based on certificated capacity.

Demonstrated peak working capacity as a percent of working design capacity is lower in the West Region (80%) than in the East (95%) and Producing (96%) regions for several reasons, according to EIA.

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