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Why the EIA is bullish about natural gas production

Key EIA estimates for the oil and gas industry (Part 5 of 11)

(Continued from Part 4)

EIA increases natural gas production estimates

The U.S. Energy Information Administration (or EIA) expects natural gas marketed production to increase to 73.98 billion cubic feet per day (or Bcf/d) in 2014 and 75.48 Bcf/d in 2015. Both figures are marginally higher than the EIA’s previous month’s estimation.

In the past few years, most of the production growth has been happening at the seven shales in the U.S. Read part 7 and part 8 of this series to find out about the shales in more detail.

Key U.S. natural gas producers and ETFs

In 2013, the country produced 70.2 Bcf/d, which was ~5% lower than the projected supply in 2014. Higher natural gas production will arise from U.S. producers like CONSOL Energy (CNX), Southwestern Energy Company (SWN), and Chesapeake Energy (CHK). Some of these companies are components of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and Energy Select Sector SPDR ETF (XLE).

Rapid growth in the Marcellus Shale contributed to the production growth. Higher natural gas production in the Marcellus led to lower gas prices in the northeast region. Read Part 7 of the series to know more about the Marcellus shale.

U.S. to become net gas exporter in 2015

Cheniere Energy’s (LNG) Sabine Pass export terminal will begin its service in 2015. The EIA expects that the U.S. will start exporting natural gas. LNG plans to use the terminal to export liquefied natural gas (or LNG).

Some of the higher production in the Eagle Ford Shale in southern Texas will be set to export to meet the growing demand from Mexico’s electric power sector. Mexican gas production is unlikely to grow strongly in the near future.

In the next part of the series, we will discuss how natural gas prices may affect its consumption. To find out more about natural gas price trends, read our articles on Winter level and natural gas production.

Continue to Part 6

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