Natural Gas Production Sets New Records in May as Marcellus Shale Becomes Country's Top Producer

Updated EIA data on monthly natural gas production in the U.S. through May is displayed above, and shows that both "gross withdrawals" and "marketed production" of natural gas set new monthly all-time records on a 12-month moving average basis (to smooth out monthly variations).  Other highlights include:

1. Gross withdrawals of natural gas in May set a new record for the month of May, and were 4.4% above last year and 7.2% above last year for the January-May period. 

2. Marketed production of natural gas in May was 4.3% above last year, and it was also the highest-ever production level for the month of May, and 7.1% above last year for the January-May period.  

3. Over the last four years, both measures of natural gas production have increased by almost 20%.  

Where are the significant increases in natural gas production taking place? A lot of the increase is coming from the Marcellus Shale region, which is about to become the most productive natural gas field in the U.S., according to this new Associated Press report:

Though serious drilling began only five years ago, the sheer volume of Marcellus production suggests that in some ways there's no going back, even as New York debates whether to allow drilling in its portion of the shale, which also lies under large parts of Pennsylvania, West Virginia, and Ohio.

In 2008, Marcellus production barely registered on national energy reports. In July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day, according to Kyle Martinez, an analyst at Bentek Energy. That's more than double the 3.6 billion cubic feet from April, and represents more than 25 percent of national shale gas production.

That's neck and neck with production from the Haynesville region in Arkansas and Texas, but new drilling permits there have declined sharply.

The Powell Shale Digest, an industry newsletter based in Fort Worth, Texas, concluded that a recent report from the U.S. Energy Information Agency means "it is reasonable to assume" the Marcellus has or will soon pass Haynesville as the top producer. The Marcellus Shale is a gas-rich formation of rock thousands of feet below ground. Advances in drilling technology made the shale accessible, which led to a boom in production, jobs, and profits, and a drop in natural gas prices for consumers.

MP: At the same time that natural gas production continues to increase, spot prices are also rising, and natural gas is now selling at $3.20 per million BTUs, the highest level since November 2011.  The higher prices are likely reflecting higher demand from electric utilities and industrial customers, and will naturally support ongoing increases in natural gas production.