Driven by soaring LNG exports, the North American gas market will support 29 billion cubic feet per day (Bcf/d) of production from 2022 to 2033, tripling its current size, Wood Mackenzie forecasts. Though producers still focus on capital discipline, investment in new fields slowly increases with the market expansion seen to be “equivalent to adding two new Permian basins.”
Supply is expected to return “at a measured pace,” as upstream companies will only gradually increase investment over the next few years. But the onset of new supply will put downward pressure on gas prices until new LNG export facilities come online towards the end of the decade, creating an outlet to international demand centres.
Dry gas production tops 100 Bcf/d
More drilling activity in Haynesville and Permian Shale has pushed US dry gas production to over 100 Bcf/d in October and November, exceeding pre-pandemic levels. But pipeline constraints could lower prices at Henry Hub to $5.62 per million British thermal units (MMBtu) in the first half of 2023, down from around $6.34 per MMBtu in December.
Production could rise another 2 percent slightly in 2023, averaging 101 Bcf/d for the year – but this growth is hampered by a lack of gas transmission capacity which limits the onward flow of gas to industry, power generators and liquefaction terminals. For the second half of next year, the EIA’s latest drilling productivity report shows that developers have scheduled more pipeline expansions which should help increase dry gas production further from already high levels.
“As Europe diversifies to more secure gas supply sources and international buyers across the globe seek reliable low-cost supply, North America is poised to deliver,” concluded Dulles Wang, WoodMac’s director, Americas Gas and LNG Research.