They Are Hiding the Collapse of US natural gas production and a looming supply crisis!
Make no mistake about it., the NG production figures released by EIA make no sense and contradict with production data from state agents. I believe a lot of EIA data come from private data collection companies, and there are attempts to falsify data.
US natural gas production is composed of four parts:
1. NG from the conventional gas wells.
2. Associated NG from conventional oil wells.
3. NG from coal bed methane wells.
4. NG from shale oil and shale gas wells
Conventional NG production is in a steady decline for several years, declining at -9% per year, or losing -0.025% per day. Based on EIA production data in the past few years, by today, gross conventional gas production is at 28.5 BCF/day now.
Associate NG from conventional oil wells is going up slightly from 16.0 BCF in 2010 to 16.19 in 2011. My estimate is the gross production of this part is 16.40 BCF/day now.
NG from coal bed methane was 5.05 BCF at beginning of 2011, and 4.70 BCF/day at beginning of 2012. My estimate is it is now 4.4 BCF/day by now due to coal curtailment.
The three above totals 49.3 BCF/day. Let’s take EIA’s gross shale gas production of 27.7 BCF/day. That brings to total gross production to 77 BCF/day. Dry gas production is roughly 80.5% of gross production. That means US dry gas production now should be 77 x 80.5% = 62.0 BCF/day. That’s the reasonable estimate, 62.0 BCF/day dry productions.
But EIA estimated 65.2 BCF/day. They over-estimated by 3.2 BCF/day.
Further, I believe the shale gas gross production is over-estimated by at least 2.0 BCF/day as the EIA’s estimate is grossly higher than data from state agencies, like Eagle Ford.
Combined, the EIA estimate of NG dry production is over-estimated by 5 BCF per day.
Like I always said, I am bullish in US natural gas price. But I never recommend UNG as a good investment vehicle. Instead people should buy coal mining stocks. Look at ACI, ANR, JRCC, BTU today!
Natural gas more than doubled from the low, look at how UNG did! Almost no gain from the low.
EOG just reported, quarter-over-quarter gas production is down -4.8%, which is an annualized -18% drop rate. This further supports my notion that the EIA production numbers are simply wrong. All major NG producers report production down. How could EIA report US gas production still growing?
EIA can't be right. Natural gas production is going down, no up. Look at the YoY nat gas production change for the 1st Quarter 2013:
XOM - 2-3% down
CHK - 2-3% down
DVN - 8% down
How can the EIA say production is rising? Nat gas traders need to stop believing the government and start believing the public filings.
Isn't it possible that those who choose not to produce will report production #'s down and the opposite for those who choose to produce( the mom and pops) hence even to net increase overall as reported by the EIA?
Don't you get it? The EIA natural gas production numbers, modeled by BenTek and others, are pure fabrications.
EIA claims that natural gas production is still at record high?
But each and every producer who reported recently reports a 8% to 10% year-over-year decline in Q1. See DEVON recently. If each producer see natural gas production declines by that much, how come the US total is not declining?
The real production is actually much lower than EIA's numbers show.
Natural gas supply shortage will become evident as early as in the early summer of 2013. Count on it!
You think all the plummeting drilling rig count has no effect on the supply? Think again!
Does this board really actually think looming supply of NG. Wacked out crack heads here also. More media hype bs. Traders beware as I will pull out the trouble false claims and copy cats. It's time to clean up the board and there are many of us here.
Marcellus needs to add roughly 4 wells per day just to keep pruduction flat. As of recently they only SPUD about 3 new wells per day. In my projection Marcellus is already in steep decline.
Without Marcellus growth, overall nat gas production falls of a cliff. Haynesville and others are already declining steeply and conventional gas production is around half what it was 5 years ago. So where's the production to keep supply flat? It's not there. I agree with you: summer is when the rubber meets the road.
Now on the shale gas production, EIA grossly over-estimated productions of virtually all shale plays.
EIA estimates for Dec 2012 were 26.85 BCF/day in total, including:
Marcellus: 7.44 BCF/day, Haynesville 6.46 BCF/day, Barnett 4.68 BCF, Fayetteville 2.81 BCF and Eagle Ford 2.09 BCF/day. All of those numbers were exagerated.
Texas RRC provides Eagle Ford gas production at 1.793 BCF/day versus EIA's 2.09 BCF. EIA over-estimated by 0.3 BCF/day.
Marcellus production leveled off in H2-2012 at average 6.24 BCF/day according to PA DEP, EIA estimated 7.44 BCF/day for Marcellus. EIA over-estimated by 1.2 BCF/day.
Likewise EIA over-estimate Haynesville production by about 0.5 BCF/day.
Just that three shale play alone, EIA over-estimated by 2.0 BCF/day.The real shale production was roughly 24.85 BCF/day in Dec 2012, and probably dropped to 23 BCF/day by now.
That gives the US total of 49.3 + 23 = 72.3 BCF/day gross production. Times 80.5% gives dry production of roughly 58.2 BCF/day, versus EIA estimate of 65.2 BCF/day/ I believe EIA over-estimated by 7 BCF/day. That translates into 35 BCF/wek over-estimate.
That volume of 35 BCF/week over-estimate is inline with the fact that storage figures seem to be declining 30 BCF per week relative to what it should be should the EIA data on production and consumption is accurate.
A looming natural gas supply crisis will become evident by summer time.
"That gives the US total of 49.3 + 23 = 72.3 BCF/day gross production. Times 80.5% gives dry production of roughly 58.2 BCF/day, versus EIA estimate of 65.2 BCF/day/ I believe EIA over-estimated by 7 BCF/day. That translates into 35 BCF/wek over-estimate."
Wouldn't that be 49 (7 * 7)? Good analysis Cadmium! Also, see my post on Powerburn's numbers being over estimated 2-3 weeks out and then his revisions downward.
Sentiment: Strong Buy