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US Shale Hotspots Hit Near Record Output

Gregory Meyer, Financial Times

The foremost shale gas region in the US is bucking the energy market doldrums, with production this month approaching a new record.

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Natural gas output from the Marcellus and Utica shales of the US north-east is averaging 22.63bn cubic feet per day in August, according to Platts Analytics. That is up 2 per cent from July and the most since February’s all-time high of 22.78bn cu ft/d.

The reversal is defying expectations of a steady production decline as the commodities slump forces energy companies to curtail drilling. The north-east in the past several years emerged as what Credit Suisse called “the key growth engine” of US gas production, helping put the country on the global energy map as a gas exporter.

“Right now we’re actually seeing higher production than in the past few months,” said Eric Brooks, energy analyst at Platts Analytics, a unit of S&P Global Platts. “It was the exact opposite of what everyone was anticipating.”

The US government forecast that combined gas output from the two shale areas lying beneath Ohio, Pennsylvania and West Virginia would decline until at least September.

But producers have managed to maintain volumes by tapping inventories of drilled but uncompleted wells and burrowing deeper, longer wells that yield more gas. Even though the number of drilling rigs has declined, new production per rig now averages about 11.4m cubic feet of gas in the Marcellus, an 18 per cent improvement from a year ago, according to Energy Information Administration figures.

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