Natural gas surplus despite fewer rigs

Natural gas rig counts may have hit a 10-year low but does that really mean that gas production will fall significantly enough to avoid a storage crisis? Reuters News reported that, “the number of rigs drilling for natural gas in the United States fell by 18 this week to 613, data from oil services firm Baker Hughes showed on Friday.  Horizontal rigs— the type most often used to extract oil or gas from shale — fell by 16 to 1,139. Oil rigs fell by 9 to 1,328.”

Yet the Energy Information Administration says that when it comes to gas if you are getting liquids you are less likely to cut back production. The EIA says that combined marketed natural gas production from the top five natural gas producing states of Texas, Louisiana, Wyoming, Oklahoma, and Colorado actually increased by about 7.5% in 2011, although their share of total U.S. natural gas output fell slightly to about 65% they show that marketed natural gas production from these states in 2011 totaled 15.7 trillion cubic feet (Tcf).

The EIA says that the drop in the top states combined share of total U.S. production reflects increased contributions from other states, particularly those in which operators significantly expanded development of shale gas formations. Shale gas production from states such as Pennsylvania helped boost overall U.S. natural gas output by almost 8% in 2011.

Due primarily to drilling programs in the Marcellus shale formation, Pennsylvania's marketed natural gas production in 2011 more than doubled to nearly 1.3 Tcf, according to preliminary estimates from Pennsylvania's Department of Environmental Protection.  Arkansas has also seen strong growth in its marketed natural gas production, with output more than tripling since 2007 due mainly to increased production in the Fayetteville shale play.

The EIA says that Alaska is the country's second leading natural gas producer in terms of gross withdrawals, but most of the state's production is not brought to market, as production volumes far exceed local demand and there is insufficient pipeline capacity to transport the gas to distant markets. Most of Alaska's natural gas not brought to market is re-injected into existing oil fields to provide sufficient pressure to maintain oil production rates.

The EIA highlights from the top marketed natural gas producing states in 2011:

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