Energize Weekly, March 11, 2020
Annual U.S. crude oil and natural gas production hit records in 2019, as did domestic natural gas consumption, according to data from the federal Energy Information Administration (EIA).
Crude oil production was up 11 percent over 2018 to an average of 12.23 million barrels per day (b/d), with output reaching 12.86 million b/d in November – the highest monthly crude oil production in history.
The 2019 crude oil record came after a 17 percent increase in output in 2018 with the surge the result of production out of tight rock formations, such as shale, using horizontal drilling and hydraulic fracturing.
U.S. dry natural gas production also set a record in 2019 averaging 92.1 billion cubic feet per day (Bcf/d), a nearly 10 percent increase over 2018. The EIA is forecasting a 2 percent increase in average production in 2020 to 94.2 Bcf/d.
Over the course of 2020, however, the agency said it expects output to fall from 95.4 Bcf/d in January to 92.5 Bcf/d in December.
In 2019, there was also a 3 percent increase in natural gas consumption hitting a record 85 Bcf/d. “New natural gas-fired electricity capacity and lower natural gas prices led to the increase in domestic natural gas consumption,” the EIA said.
In 2019, electricity utilities consumed 31 Bcf/d, 36 percent of total domestic use. Natural gas-fired generation grew especially in the PJM Interconnection, the largest grid in the U.S., serving part of the Midwest and mid-Atlantic.
Natural gas now accounts for the largest share of electricity generation – 38 percent – having surpassed coal, which now has a 23 percent share.
“New natural gas generation capacity additions have continued to displace coal-fired power plants; about 5 percent of the total existing U.S. coal-fired capacity was retired in 2019,” the EIA said.
When it came to regional output, Texas continued to produce more oil than any state or region, averaging 5.07 million b/d and accounting for 41 percent of the total national production. Texas hit a monthly record of 5.35 million b/d in December 2019.
The growth – an increase of an average of 6,600 b/d for the year – was driven by shale production in the Permian Basin in West Texas. The state’s crude oil production is up 333 percent since 2010.
New Mexico, which is on the western end of the Permian Basin, posted the second largest average rate of growth in 2019 with a record 749,000 b/d. It was the state’s third consecutive year of increased output.
Colorado and North Dakota also posted record output in 2019 of about 514,000 b/d in Colorado and 1.4 million b/d in North Dakota.
Offshore Gulf of Mexico production was also up as seven new projects came online in 2019, adding 126,000 b/d of new crude output and leading to its highest annual average production of 1.88 million b/d – making it the second biggest region in the U.S.
Appalachian shale plays, such as the Marcellus Shale in Pennsylvania, continued to be the biggest source of dry natural gas production with an average of more than 15.2 Bcf/d followed by the Haynesville Shale in east Texas and Louisiana with 10.3 Bcf/d.
“The falling production over the course of 2020 is projected to take place mainly in the Appalachia and Permian regions,” the EIA said. “In the Appalachia region, low natural gas prices are discouraging natural gas-directed drilling, and in the Permian, low oil prices are expected to reduce associated gas output from oil-directed wells.”
The 2021 EIA forecast is for natural gas production to stabilize at an annual average of 92.6 Bcf/d, marking a 2 percent decline over the 2020 average – the first decline in average annual production since 2016.
