A 2-3% decline in North American natural gas production may be forcing industrial and utility consumers to reduce gas consumption this year, according to a report by Lehman Brothers.

In its 3Q03 preview of 49 North American gas producers, Lehman analyst Thomas Driscoll said that it appears production volumes fell 1.5-2% sequentially and 2.5-4% year-over-year. Driscoll now expects to see a 2-3% North American gas production volume decline this year, which in turn “will force industrial and perhaps utility consumers to reduce gas consumption in 2003.”

Lehman’s production numbers nearly mirror those of Southwest Securities, which released its review of 43 North American gas producers also this week (see Daily GPI, Oct. 7).

Lehman’s survey, which accounts for about 71% of U.S. volumes and 69% of Canadian volumes, said U.S. volumes fell more than 2% from the second quarter, and both U.S. and Canadian production fell about 3% from last year’s third quarter levels. Canadian 3Q03 production is expected to be flat sequentially.

Those U.S. producers showing the biggest declines in the third quarter appear to be ATP Oil & Gas, off 43% from a year ago, and Amerada Hess, down 39% from 3Q02. Nuevo Energy’s production was down 28% compared with last year’s third quarter. In Canada, ConocoPhillips showed the largest decline year-over-year of 21%, followed by Canadian Natural Resources, which showed a 12% loss from 3Q02.

Not all producers’ gas volumes declined in the quarter, according to Driscoll. The largest gain was made by Pioneer Natural Resources, up 109%. Also showing gas volume gains in the quarter versus a year ago were Apache Corp., 56%; Westport Resources, 45%; and EnCana Corp. and Chesapeake Energy, both up 31%. In Canada, Burlington Resources Inc. reported a 13% jump in gas production versus 3Q02. Husky Energy gained 9% in the quarter, while Devon and EOG Resources both were up 7% from a year ago.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.