Energy Prospectus

June EIA-914: Total natural gas production was up 1.34 Bcf/d sequentially and down 2.1 Bcf/d y/y (-1.8%);
● Lower-48 supply (99.1 Bcf/d of gross production) showed a sequential increase of 1.6 Bcf/d (-2.3%) and was 2.42 Bcf/d lower y/y (-2.4%).
● Increases (Bcf/d): Texas +0.88 (+3.3%), and Oklahoma +0.55 (+7.9%).
● Decreases (Bcf/d): Pennsylvania -0.33 (-1.7%) and Alaska -0.26 (-2.9%).

May Lower-48 production data was revised up 0.1 Bcf/d to 97.5 Bcf/d.
● May Revised 0.1 Bcf/d higher: May L-48 production data was revised 0.1 Bcf/d higher to 97.5 Bcf/d. The biggest upward revision was New
Mexico +0.08 (1.6%) while the biggest downward revisions were Texas -0.02 (-0.1%) and Colorado -0.01 (-0.2%).

Since last year overproduced natural gas, and since the weather has been cooler, doesn’t this downward production blunt the bullishness of the natural gas forecasts? Or is it a trend?

There is still a concern that natural gas storage will fill before winter draws begin. It is a valid fear because if storage facilities can't take more gas, the pipelines will have to tell upstream companies to choke back wells. Actually, it is easier to choke back flowing gas wells than it is to shut in oil wells. Storage never has and never will overflow.

We have about 4,200 Bcf of working storage, so there is plenty of room today and Hurricane Laura has taken a lot of GOM gas production offline. GOM production is coming back slower than I expected because of the extent of the onshore damage. Lots of offshore workers live in the area of Louisiana that was hardest hit.

September and October are naturally lower demand months. However, this year we do have demand for LNG coming on strong. In November, the front month NYMEX price will move over $3.00.