Associated natural gas production from U.S. onshore oil plays fell in 2020, marking the first year/year decline in output since 2016, the Energy Information Administration (EIA) said in a research note published Monday.
Production of associated gas from the Permian and Anadarko basins, as well as from the Bakken, Eagle Ford and Niobrara shales, fell 4.1% in 2020 to 14.2 Bcf/d as crude oil production in these regions plummeted 9.2% from 2019 levels.
Prior to 2020, associated gas production from these regions had been climbing alongside increases in oil production. EIA recorded the most rapid growth from 2016 to 2019, when associated gas output rose 6.1 Bcf/d.
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Then came 2020, when the start of the Covid-19 pandemic sent shockwaves through the economy and sent crude oil prices cratering. Negative West Texas Intermediate futures in the spring of that year coincided with a precipitous drop in rig activity.
The declining output was not evenly distributed across the major U.S. producing regions. The Permian, underlying parts of West Texas and southeastern New Mexico, accounted for 50% of U.S. associated gas production in 2020, according to EIA.
“Only the Permian region increased its production of both crude oil and associated gas in 2020, but these increases did not offset declines in both crude oil and associated gas production in the other four regions,” EIA said.
Researchers said the higher associated gas output in the Permian can be partly attributed to increased natural gas takeaway capacity out of the region.
Even with the falling associated gas output, 2020 brought record high volumes of natural gas plant liquids production, driven by high demand for ethane, according to EIA.
“Ethane consumption has been growing steadily both domestically and through exports since 2014,” researchers said.
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