Despite a sharp increase in drilling activity recently,financial reports from 21 large producers, representing about 32%of total U.S. gas production, show a gas production decline of 4%from last year’s third quarter levels and 3% from the first ninemonths of 1998.

The results certainly go a long way in explaining the extendedperiod of historically high gas futures prices on the New YorkMercantile Exchange and on the spot market this year. However,whether total production actually was down by 4% in the thirdquarter remains to be seen. So far, the Energy InformationAdministration estimates total gas production in the U.S. was flatat about 55,044 MMcf/d during the third quarter compared to 3Q98and was down by only 1.2% to 54,415 MMcf/d during the first ninemonths of the year. Those are only estimates and EIA has been knownto significantly adjust its numbers as data trickles in.

The 21 producers tabulated by NGI reported 17,609 MMcf/d of gaswas produced in the third quarter and 17,719 MMcf/d was the averagefor the first nine months of the year, compared to 18,227 MMcf/d in3Q98 and 18,269 MMcf/d in the first nine months in 1998.

Pioneer with a 55% drop in U.S. production to 240 MMcf/d, showedthe largest percentage decline in this group, followed by Mobilwith a 26% drop to 868 MMcf/d, and UPR with a 19% slip to 978MMcf/d. On the other side of the track, Ocean Energy posted a 37%increase in U.S. gas production to 428 MMcf/d, Coastal showed a 23%rise to 659 MMcf/d and Apache had a 16% increase to 495 MMcf/d.

Most indicated a strong likelihood gas production would make aturn-around. But with the time lag between drilling and production,it will be hard to pinpoint exactly when over the next year thebalance might shift.

Rocco Canonica

U.S. Gas Production
(MMcf/d)

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