EIA reports narrow margin of surplus US natural gas production capacity

By OGJ editors
HOUSTON, Apr. 16 -- Available natural gas production capacity appears sufficient to meet the level of anticipated US gas production this year, but it's a narrow margin of surplus capacity, the Energy Information Administration said.

That means that maintaining or increasing gas drilling is critical to maintaining or increasing gas productive capacity, the agency said.

Late last month, the EIA released its estimates of available productive capacity. The estimates were compared with forecast natural gas demand in a report entitled "Natural Gas Productive Capacity For the Lower 48 States."

The analysis projected an average surplus capacity of 5.6 bcfd in 2003 compared with a projected 51.4 bcfd average production rate. The EIA noted this limits the available production response to any sudden demand increase or production decrease.

"Withdrawals of stored natural gas can normally respond to such problems, but gas storage levels are now at record lows. Therefore, the narrow surplus margin indicates a significant potential for short-term price increases in the event of such contingencies," the EIA said.

Wells producing for 1 year or less contribute 25-30% of total wellhead capacity. The two largest supply areas, Texas and the Gulf of Mexico, together produce about 50% of the nation's total gas production. Those two areas also have the highest percentage (30%) of wellhead capacity from wells 1 year old or less.

Recent trends in productive capacity closely tracked the number of well completions, which were down 25% in 2002. A 34% increase in well completions is projected for 2003 with an associated increase in productive capacity, EIA said.

The Rocky Mountain area was projected to have the largest estimated surplus capacity in 2003 at 1.4 bcfd followed by Texas with 1.3 bcfd, New Mexico at 0.5 bcfd, and Oklahoma at 0.4 bcfd. Estimated surplus capacity in the rest of the Lower 48 and the Gulf of Mexico was 2.0 bcfd.

"While the Lower 48 states taken together are likely to have a small surplus or unutilized capacity, specific areas may have little or none. Because of the limitations in the transportation network, surplus capacity in one area may not be available to all other areas," EIA said.

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