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US gas production slowdown looms large in new year as freeze impact lingers


Output remains down more than 11 Bcf/d from the pre-freeze level

US gas production declines common after New Year

NYMEX February futures dip to $4.50/MMBtu, despite risks

  • Author
  • J Robinson
  • Editor
  • Valarie Jackson
  • Commodity
  • Natural Gas

A full rebound in US natural gas production could be at risk following the recent freeze-off as many operators wrap up 2022 production targets heading into the new year when domestic output typically slows.

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Over the past several days, US gas production has rebounded sharply after bottoming out at just 82.7 Bcf/d Dec. 25 when snow, ice, and frigid temperatures curtailed output from major basins, including Appalachia, the Permian, Haynesville, Bakken, and the Denver-Julesburg, among others. Domestic production was estimated at around 86.1 Bcf/d Dec. 28, down about 1.6 Bcf from Dec. 27 output continues to thaw out in a rocky recovery.

Over the Christmas holiday weekend, temperatures around Pittsburgh plunged to as much as 4 degrees Fahrenheit below zero, fueling a nearly 10 Bcf/d drop in Appalachian Basin gas production. Even basins farther south faced temperatures that plummeted to around 10 F in both Shreveport, Louisiana, and Midland, Texas. In Louisiana's Haynesville shale, production dropped about 1.2 Bcf/d as a result. In the Permian Basin of West Texas, the decline registered as much as 2.5 Bcf/d, data from S&P Global Commodity Insights shows.

While output now appears to be on the rebound, recent history suggests—not only that freeze-off impacts could linger into the new year—but that many producers may end up holding back output from a full rebound until sometime later in the first quarter of 2023 or beyond.

Production declines

Over at least the past several years, US gas production has seen sharp declines in the new year.

From 2021 to 2022 a sharp drop in domestic output in early January was fueled largely by a freeze-off. In the weeks following, though, output was slow to rebound with the new year decline persisting into the late-summer months—well beyond the time required to recover from the freeze.

In 2020-21, US production dropped less than 1 Bcf/d after the New Year and following a February freeze-off rebounded back to its late-2020 level by March. In the year prior, though, output dropped heading into the new year and continued its decline through mid-April, falling almost 10 Bcf/d as demand plummeted in the wake of fallout in commodity prices caused by the global coronavirus pandemic.

While production this year is unlikely to see a months-long deep contraction, new-year curtailments typical in Appalachia and other basins could drag out the rebound through much of the Q1, keeping output some 1-2 Bcf/d below November and early December highs in the mid-97 Bcf/d range.


While production declines have been a recurring feature in the US gas market for more than a few years, many traders appear to be banking on near-term demand weakness having a countervailing or larger market impact.

During and even following the Christmas weekend freeze-off, NYMEX Henry Hub gas futures prices plunged, trading below $5/MMBtu as many market participants began shifting focus to near-term weather forecasts, many of which are now predicting a milder-than-normal start to January. Adding to that, many traders are now closely watching the restart of production at Freeport LNG where a further delay could have a material impact on prices.

The soon-to-be-prompt February futures contract was down again Dec. 28, dipping as low as $4.50/MMBtu in intraday trading with Q2 contract prices briefly falling into the upper $3s/MMBtu, CME Group data showed.