US gas production surges to 19-month high in pre-heating-season push

US natural gas production continues to surge this month, hitting fresh 19-month highs recently propelled by gains in output across Appalachia, the Haynesville Shale and the Permian Basin.

Month to date, domestic gas production has trended at just over 93.9 Bcf/d rising more than 2.2 Bcf/d, or about 2.4%, from its October average, data compiled by S&P Global Platts Analytics shows.

The recent surge comes almost entirely from a handful of onshore fields where producers are ramping up output ahead of the heating season in a likely push to capture record prices this winter.

In Appalachia, production climbed to a record-high 34.7 Bcf/d earlier this month. Just four days prior, the Haynesville shale recorded its own record high at over 14.1 Bcf/d. Production in the Permian Basin, meanwhile, has recently come within just 80 MMcf of its prior record high at 14 Bcf/d in June.

This winter, producers in each of the basins face diverse incentives to continue growing output in a seasonal push that could lift near-term production above the pre-pandemic record at over 96 Bcf/d.

Appalachia

In Pennsylvania, the fast-approaching startup of Transcontinental Gas Pipe Line's Leidy South expansion, scheduled for Dec. 1, has given some Marcellus producers good reason to ramp up output this winter.

For capacity holders – National Fuel Gas Company and Coterra Energy, formerly Cabot Oil & Gas – the project promises an additional 580 MMcf/d in firm capacity to end-user markets in the Mid-Atlantic.

National Fuel Gas has reserved 330 MMcf/d of the new capacity, with Coterra holding the remaining 250 MMcf/d. On their respective third-quarter earnings calls, executives from both companies described capacity-linked production increases anticipated to come this winter.

This earnings season, most of Appalachia's other major producers were emphatic about sticking to maintenance-level capital spending programs, keeping production guidance unchanged. Two notable exceptions were CNX Resources and Chesapeake Energy which revised fourth-quarter guidance slightly higher pointing to operational efficiencies and the speed of their respective frack crews.

Haynesville

In the Haynesville Shale, the promise of record LNG export demand this winter has given producers there their own incentive to ramp up output ahead of peak-winter heating season.

Along the nearby Gulf Coast, the recent initiation of feedgas deliveries to Sabine Pass Train 6 has already seen flows to Cheniere Energy's Louisiana terminal hit record highs at over 4.4 Bcf/d this month.

With the startup of deliveries to Calcasieu Pass Trains 1 and 2 also now fast approaching, Platts Analytics is projecting total US LNG export demand to reach levels comfortably above 12 Bcf/d this winter.

The anticipated growth in Gulf Coast LNG demand was likely a motivation for Haynesville producers to dial up drilling activity this summer. In August, the basin's rig count rebounded to pre-pandemic highs in the upper 50s. In the week ended Nov. 10, the Haynesville's rig count was estimated at 52 – down about 10% from its summer high, data published by Enverus showed.

Permian

In the Permian Basin, recent gains in associated gas production have been fueled largely by growing crude volumes as strong oil and refined products demand and prices incentivize an uptick in drilling activity.

On third-quarter earnings calls, midstream companies including Enterprise Products Partners, Plains All American, MPLX, Magellan Midstream and NuStar Energy reported rising crude and liquids volumes in the Permian with a bullish outlook to the fourth quarter and beyond.

On its own quarterly earnings call, natural gas midstream giant Kinder Morgan also reported an uptick in transport volumes out of West Texas driven in part by high utilization on its Permian Highway Pipeline.

In the week ended Nov. 10, rig count in the Permian was estimated at 272, rebounding from a recent dip to its highest level since April 2020, Enverus data showed.