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Ohio Utica Shale

U.S. natural gas output in 2014 likely record high, EIA says

By Bob Downing Published: June 11, 2014

From Bloomberg News today:

U.S. natural gas output will reach 73 billion cubic feet a day for the first time this year as new pipelines tap into shale supplies stranded in the Marcellus formation in the Northeast, a new government report showed.

Marketed gas output in the lower 48 states will increase 4 percent from 2013, setting a record for the fourth straight year, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook, released Tuesday in Washington. The production estimate was raised from 72.26 billion in last month’s report as “several new projects to support Marcellus production have either recently come on line or will begin operations later this year,” the government said.

The EIA left its 2014 price outlook unchanged at $4.74 per million British thermal units as the gains in shale output are partly offset by increased gas use. Gas inventories fell to an 11-year low in March after a frigid winter spurred record demand and hampered production, according to the EIA.

“They show a pretty sizable increase this year and definitely a larger increase than what they envisioned,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “We’ve gotten used to such increases in supply but with such a shortfall in inventories, it probably is not enough to lower prices.”

Record production will help boost gas inventories to 3.424 trillion cubic feet by the end of October, which would be the lowest level at the start of the peak-demand heating season since 2008, Tuesday’s report showed.

Fuel demand

Demand for the fuel from electricity generators as well as industrial, commercial and residential consumers will increase about 1 billion cubic feet a day this year to average 66.36 billion. These consumers account for 91 percent of U.S. gas use.

Drilling technologies such as hydraulic fracturing, or fracking, have made it more economical to tap shale deposits. Gross output from the Marcellus field will average almost 15 billion cubic feet a day in July, up 26 percent from a year earlier, the EIA said Monday in its monthly Drilling Productivity Report.

“The report talks about projects that are largely already tied in,” and growth in the Marcellus is limited by a lack of infrastructure, Viswanath said. “Unless we see production gains out of the Haynesville or Permian Basins, which aren’t constrained, the new sources of supply are constrained and we will not likely see another production surge until later in November.”

Pipeline projects

TransCanada Corp.’s ANR Pipeline completed a project in April that began sending Marcellus gas west on its Lebanon Lateral in Ohio, the EIA said. The government also said that Spectra Energy Corp.’s Texas Eastern Transmission pipeline will bring 900 million cubic feet a day of capacity online to move gas out of Appalachia.

Dry gas production, which is equivalent to marketed gas minus extraction loss, will top 69 billion cubic feet per day for the first time this year, representing a gain of 3.7 percent from 2013, Tuesday’s report showed.

The surge in onshore production “has reduced the vulnerability of overall U.S. oil and natural gas supply to hurricanes” in the Gulf of Mexico, the government said. The share of gas output produced from the Gulf fell to 5 percent last year from 26 percent in 1997.

Natural gas futures for July fell 11.5 cents, or 2.5 percent, to $4.53 per million Btu on the New York Mercantile Exchange. Prices are up 19 percent from a year ago.

“We certainly know where the resource base is and the resource base is located in a region not well connected to the market,” Viswanath said. “The infrastructure challenge is simply what limits our ability to bring supply to the market.”

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.