North American natural gas volumes appear to have fallen 1.4% sequentially and 4.6% over levels for the same period a year ago, according to Lehman Brothers analyst Thomas R. Driscoll. Using final production numbers from 43 Lower 48 states and 14 Canadian producers, Driscoll estimated that U.S. production for 2002 will be down 5%-6% over a year ago, while Canada will have a 2.5% drop in production from 2001 levels.

Compared with last year’s third quarter, U.S. production was down 4.6%, with 43 companies reporting gas volumes of 26,808 MMcf/d, 1.1% lower than the second quarter and down 5.3% from year-ago levels. The companies beat Lehman estimates by 0.5%, and are responsible for an estimated 70% of total U.S. gas production (grossed up for royalties). Quarterly volumes reflected a loss of about 35 Bcf (0.7% of quarterly production) because of the tropical storms and hurricane in the Gulf of Mexico. In 2001, estimated production was up 0.7% from 2000, while it was down 1.3% in 2000 over 1999, and down another 1.3% in 1999 over 1998.

In Canada, Lehman’s estimates that natural gas production in the quarter fell 2.2% sequentially and 2.5% from a year earlier. Full-year production now is estimated to be down 1%-2% from the previous year, compared with a 6% annual increase in 2001 over 2000. The 14-company Canadian production survey accounts for almost 70% of total gas production there. Quarterly production was down 2.1% over the second quarter of 2002, and down 2.6% from year-ago levels.

For Lower 48 producers, Swift Energy showed the largest year-over-year decline, down 42% from gas production levels in the third quarter of 2001, reporting 144 MMcf/d compared with 153 MMcf/d a year ago, and 147 MMcf/d in the second quarter of this year. Also down at least 20% were National Fuel Gas, 29%; Vintage Petroleum, 27%; Unocal, 24%; Amerada Hess, 23%; and Apache Corp. and ATP Oil and Gas, both down 20%.

Although fewer companies were surveyed in Canada, the numbers there also were not as discouraging, with the biggest loss at Talisman, which was down 12% over a year ago. Also down were Apache, 9%; EnCana and Exxon Mobil, both off 4%; Burlington Resources, 3%; and Canadian Natural Resources and ConocoPhillips, off 1%.

However, several Lower 48 companies showed production gains from a year earlier, including XTO Energy, up 26%; Williams, 24%; Tom Brown, 16%; Pogo Producing, 11%; Shell, 10%; and Pioneer Natural Resources and Nexen Inc., both up 8%. Dominion also showed a 5% gain, while Kerr McGee was up 4% and Nuevo Energy was up 2%. Producers gaining in Canada included EOG Resources, up 21%; and Anadarko Petroleum, 11%.

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