The Appalachia Basin, made up of the Marcellus formations and the Utica Shale, accounted for more than 40 percent of the natural gas produced in the US in 2020.
Unlike many of the oil plays in the US Lower 48, natural gas plays, including the Appalachia Basin, saw a less drastic change in production and drilling activity during the economic contraction caused by the COVID-19 pandemic, according to GlobalData.
GlobalData’s latest market analysis report, Marcellus and Utica Shales in the US, 2020, revealed that the Appalachia region averaged 32.19 billion cubic meters of natural gas per day (bcfd) and 33.44bcfd in 2019 and 2020, respectively.
While major oil-producing operators slashed their 2020 capital expenditure up to 50-60 percent, the top three producers in the Appalachia Basin – EQT Corporation, Antero Resources, and Southwestern Energy – have cut their capital only by 20, 35 and 40 percent, respectively.
“The future prices for Henry Hub in 2020 are currently averaging $2.75 per mcf, which prompts many companies to increase drilling and completion activities,” GlobalData oil and gas analyst Andrew Folse said.
He added: “The higher price is linked to the growing exports of LNG, growth in the number of heating days, and the drawdowns in the US natural gas storage. In 2019, the US exported approximately 5bcfd of LNG, which increased to 6.53bcfd in 2020. The EIA forecasts that LNG exports will continue to grow to an average of 8.50bcfd in 2021.”
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