North American natural gas production fell an estimated 2.2% sequentially from the second quarter and 3.6% versus year-ago levels, according to a completed survey of third quarter numbers by Lehman Brothers.
Analyst Thomas Driscoll’s survey covered 49 gas producers that total about 70% of U.S. and Canadian volumes. Preliminary numbers also indicate that fourth quarter gas production will be down 0.5-1% over the third quarter and 2-2.5% year-over-year. Together, the U.S. and Canadian producers are expected to be down 2.4% year-over-year.
“We believe a 2.5-3% North American gas production decline in 2003 is forcing industrial and utility consumers to reduce gas consumption,” Driscoll reported. “Full-year 2003 natural gas production volumes are expected to fall 2.8% in the United States and 3.2% in Canada.”
Lehman’s U.S. numbers were revised downward from an earlier forecast of a 2.5% decline; the Canadian figures are unchanged.
“We estimate that Q3 U.S. natural gas production for the surveyed companies decreased an estimated 2.9% sequentially and fell 4% versus Q32002,” which is lower than a previous Lehman estimate of a 2.8% decline sequentially and a 3.9% decrease over year-ago levels. Lehman also found that Canadian Q32003 gas production fell 0.8% sequentially and declined 2.5% from a year earlier.
On its estimates for U.S. gas supply, Lehman expects it to fall 5% this year, based on several factors, including the following:
Of the 44 U.S. producers surveyed (net of MMcf/d in royalties), Amerada Hess and ATP Oil & Gas were the biggest gas production losers, both off 39% from year-ago figures. Also dropping on significant asset sales was El Paso Corp., down 33%. National Fuel’s gas production was down 29% from a year ago, while Spinnaker was down 25%. Also reporting double-digit gas production losses year-over-year were Nuevo Energy, 24%; Swift Energy, 21%; Williams, 18%; Unocal, 17%; Shell, 15%; BP, 14%; Vintage Petroleum, 13%; Kerr McGee, 12%; ChevronTexaco, 11%; and Exxon Mobil, 10%.
There were significant gas gainers, however, including Pioneer Natural Resources, with a healthy 111% increase in gas production over last year’s third quarter. Also showing strong gas gains in the quarter were Apache, 46%; Westport, 45%; Chesapeake, 37%; EnCana, 34%; Nexen, 27%; and XTO Energy, 26%.
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