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America's shale natural gas production is taking off

[NEW YORK] America's shale gas production is about to surge 12 per cent. Sort of.

The Energy Department issued a report Monday estimating that the nation's prolific shale formations will yield 59.4 billion cubic feet a day in September, a massive jump from the roughly 53 billion projected for August. The difference: The agency began including the more than 6 billion cubic feet a day of gas flowing out of the Anadarko basin of Oklahoma and Texas.

The addition of the Anadarko is testament to the flood of gas flowing out of shale formations known better for their oil riches. Almost half of the country's shale gas is now being produced in crude plays, pulled out of oil wells as a byproduct. These supplies, known as associated gas, threaten to quash any meaningful recovery in an already-glutted market.

"This is again telling us why we are in a perpetual bear market in natty gas," said Stephen Schork, president of Schork Group Inc, a consulting group in Villanova, Pennsylvania. "We are finding more and more gas. It's giving the bears more ammo." Better drilling and well completion techniques have revived the Anadarko, which the Energy Department described as an "already well-established oil and gas producing basin." The region was home to 129 active drilling rigs as of July, second only to Texas's Permian Basin, the agency's monthly report showed.

sentifi.com

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Gas futures have been battered this year by a shale-driven supply glut that has persisted for much of the past two years. Prices have dropped 21 per cent this year, settling Monday at US$2.96 per million British thermal units on the New York Mercantile Exchange.

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