EIA Raises U.S. Natural Gas Production Forecast by 1% for 2023

In the December STEO, EIA estimate U.S. production of dry natural gas will average about 100.0 Bcf/d from December through March, down about 0.5 Bcf/d from November. EIA forecast production to grow slightly in 2023, averaging between 100 Bcf/d and 101 Bcf/d for the year, about 2% more than in 2022.  Growth in natural gas production was driven by increased drilling activity in the Haynesville region in Louisiana and East Texas and in the Permian region in West Texas and Southeast New Mexico.

STEO Natural Gas Production Highlights

  • Dry natural gas production has increased during 2022 in the United States, averaging more than 100 Bcf/d in October and November and exceeding pre-pandemic monthly production records from 2019.
  • Recent pipeline infrastructure expansions in both Haynesville region in Louisiana and East Texas and in the Permian region in West Texas and Southeast New Mexico facilitated the increases in production.
  • Higher-than-average injections of natural gas into storage in September and October reduced the deficit of natural gas inventories to the five-year average and contributed to falling natural gas prices which have since pulled back.
  • EIA forecast production to grow slightly in 2023, averaging between 100 Bcf/d and 101 Bcf/d for the year, about 2% more than in 2022.
  • Production in the EIA forecast for 1H23 is limited by pipeline constraints and declining natural gas prices. In 2H23, more pipeline infrastructure expansion projects are set to come online and contribute to increases in dry natural gas production. The pace at which these projects are completed is a notable uncertainty in the EIA forecast, and delays could result in lower production than we expect.
  • EIA expect natural gas prices will begin declining after January as U.S. storage levels move closer to the previous five-year average, largely as a result of rising U.S. natural gas production. However, the possibility of price volatility remains high.

The December STEO includes a contraction in U.S. economic activity in the fourth quarter of 2022 (4Q22) and 1Q23, which represents a slightly shorter and milder period of economic contraction than in last month’s STEO. Uncertainty in macroeconomic conditions could significantly affect energy markets in the forecast period. Based on the S&P Global macroeconomic model, we assume U.S. GDP will remain flat in 2023.

Source: EIA

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