Spotlight: US dry gas recovery stronger than expected despite suppressed D&C activity; high-side production risk apparent - S&P Global

kodikod.blogspot.com

Highlights

US dry gas production surprised to the high side and is in line with pre-COVID 19 levels month to date (MTD) in April 2021

Since bottoming out in mid-2020, US rig activity has increased nearly 80%, or 220 rigs, but remains roughly 300 rigs lower than the same time last year. Completions, or frac, crews have doubled over the last six months but are lagging as well.

Rising gas-to-oil (GOR) ratios and reduced flaring support dry gas resiliency, staving off declines and positioning operators for a speedy recovery

A version of this Spotlight from S&P Global Platts Analytics was first published April 6.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Throughout the recent downturn, US dry gas production continually surprised to the high side. After a short-lived period of declines led by the pandemic and suppressed crude prices, US natural gas production has increased over 6 Bcf/d to a MTD average of 92.6 Bcf/d. To put this in perspective, today's production estimate is merely 500 MMcf/d lower than March of last year. This is particularly impressive given suppressed drilling and completion activity.

Since bottoming out in mid-2020, US rig activity has increased nearly 80%, or 220 rigs, but remains roughly 300 rigs lower than the same time last year. While drilling activity among the dry gas plays was negatively impacted by the pandemic and subsequent crude price downturn, the consequences were far more severe in the crude plays. As such, the ongoing recovery has been led by the associated gas plays. Additionally, there are currently around 200 frac crews, 100 fewer than pre-price collapse levels, actively completing wells across the US.

While operators continue to improve upon well level and capital efficiencies, rising GORs and reduced flaring rates are seemingly the biggest contributors when it comes to production strength and its surprising recovery throughout 2020 and early 2021. GORs among the associated gas plays currently sit at roughly 3 Mcf/barrel and are 50% higher than the beginning of 2019.

Additionally, the amount of gas being flared has come off substantially. Since mid-2019, S&P Global Platts' flared volume estimate for the top associated gas plays has declined by 1.4 Bcf/d. While reduced flaring is to be expected given reduced completion activity, flaring among many of the currently producing wells previously constrained due to infrastructure are now able to reach the interstates given available capacity.

In its March 2021 case, S&P Global Platts forecasts US natural gas production to decline slightly and average 91.6 Bcf/d through the remainder of the summer before turning a corner in November 2021. However, strong GORs and reduced flaring coupled with a renewed sense of optimism backed by improved crude prices could lead to a more timely recovery among the associated gas plays, adding high-side risk to the US production forecast.

Let's block ads! (Why?)

"gas" - Google News
April 15, 2021 at 05:01PM
https://ift.tt/3abN4lJ

Spotlight: US dry gas recovery stronger than expected despite suppressed D&C activity; high-side production risk apparent - S&P Global
"gas" - Google News
https://ift.tt/2LxAFvS
https://ift.tt/3fcD5NP

Bagikan Berita Ini