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Released June 21, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. natural gas production is waking from its pandemic-era slumber. According to the U.S. Energy Information Administration (EIA), domestic production of dry natural gas averaged 92.2 billion cubic feet per day in May 2021, compared with 87.8 billion cubic feet per day in May 2020. Domestic drilling activity began to grow in the last quarter of 2020, and Industrial Info now is tracking $3 billion worth of natural gas-production projects set to begin construction from July through September, the bulk of which are in the deepwater Gulf of Mexico.
U.S. natural gas production hit a monthly high in December 2019, when dry production averaged 97 billion cubic feet per day, only to begin tumbling as COVID-19 infections widened, eventually hitting its pandemic-era low in May 2020 (not counting the exceptional circumstances of February 2021, when freeze-offs in and around Texas forced production shut ins). But domestic dry natural gas production has only grown since state and local governments began easing or eliminating pandemic-related restrictions, and the EIA now expects it to average about 94.8 billion cubic feet per day in the last two months of 2022.
As a result, natural gas exploration and production (E&P) companies are trying to balance the expected growth in demand with a renewed desire to invest in smaller, more efficient E&P projects as they pay down debts accumulated during the pandemic.
Chevron Corporation (NYSE:CVX) (San Ramon, California) was among the many oil and gas majors to slash its capital-spending outlook during the pandemic. Nonetheless, Chevron plans to double its investment in the Permian Basin to about $4 billion over the 2020-2025 period. It also is developing ambitious but practical projects, such as its Anchor Field development in the deepwater Gulf of Mexico, which Jay Johnson, Chevron's executive vice president of upstream, called "a modest-sized, standardized facility that we can easily replicate."
The Anchor development includes a $1.5 billion platform about 140 miles off the coast of Louisiana, a $500 million drilling program comprising seven wells and about $500 million in subsea infrastructure. It is expected to produce about 75,000 barrels per day (BBL/d) of crude oil and natural gas from depths of 4,000 to 5,000 feet. Construction is expected to begin in the third quarter, with completion in the first half of 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can see detailed project reports for the platform, drilling program and subsea infrastructure.
Johnson said the Anchor project is an example of Chevron's new formula for success: Focusing more on capital efficiency and returns, rather than mega-projects. "Our strategy shifted to one of maintaining existing production and getting the highest returns that we could, but at the same time preserving longer-term value," he recently told Upstream Online. "Because of the short-cycle nature of our investments, we can watch what is happening in the markets, and then build that activity level back up when it makes sense." For more information on Chevron's new approach, see June 15, 2021, article - Big Oil Keeping its Capital Discipline Pledge; February 2, 2021, article - Chevron Braces for Tougher Oil & Gas Market After Brutal 2020; and December 4, 2020, article - Chevron Sharply Reduces Annual Capex Guidance Amid Pandemic.
Click on the image at right for a heat map of natural gas-production projects in Louisiana and in the deepwater Gulf of Mexico that are set to begin construction in the third quarter, from Industrial Info's Geolocator tool.
Among the other companies at work in the Gulf of Mexico are Arena Energy LP (The Woodlands, Texas), which is preparing to begin a drilling program in the Main Pass Field that will increase production through a single well, and Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands), which expects to kick off a drilling program in the Mississippi Canyon Field that will comprise two wells. Subscribers can learn more from Industrial Info's reports on the Main Pass and Mississippi Canyon projects.
In addition to the abovementioned capital-spending projects, Industrial Info is tracking a series of maintenance-related projects at U.S. natural gas-production facilities in the third quarter. Subscribers can click here for a list.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
U.S. natural gas production hit a monthly high in December 2019, when dry production averaged 97 billion cubic feet per day, only to begin tumbling as COVID-19 infections widened, eventually hitting its pandemic-era low in May 2020 (not counting the exceptional circumstances of February 2021, when freeze-offs in and around Texas forced production shut ins). But domestic dry natural gas production has only grown since state and local governments began easing or eliminating pandemic-related restrictions, and the EIA now expects it to average about 94.8 billion cubic feet per day in the last two months of 2022.
As a result, natural gas exploration and production (E&P) companies are trying to balance the expected growth in demand with a renewed desire to invest in smaller, more efficient E&P projects as they pay down debts accumulated during the pandemic.
Chevron Corporation (NYSE:CVX) (San Ramon, California) was among the many oil and gas majors to slash its capital-spending outlook during the pandemic. Nonetheless, Chevron plans to double its investment in the Permian Basin to about $4 billion over the 2020-2025 period. It also is developing ambitious but practical projects, such as its Anchor Field development in the deepwater Gulf of Mexico, which Jay Johnson, Chevron's executive vice president of upstream, called "a modest-sized, standardized facility that we can easily replicate."
The Anchor development includes a $1.5 billion platform about 140 miles off the coast of Louisiana, a $500 million drilling program comprising seven wells and about $500 million in subsea infrastructure. It is expected to produce about 75,000 barrels per day (BBL/d) of crude oil and natural gas from depths of 4,000 to 5,000 feet. Construction is expected to begin in the third quarter, with completion in the first half of 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can see detailed project reports for the platform, drilling program and subsea infrastructure.
Johnson said the Anchor project is an example of Chevron's new formula for success: Focusing more on capital efficiency and returns, rather than mega-projects. "Our strategy shifted to one of maintaining existing production and getting the highest returns that we could, but at the same time preserving longer-term value," he recently told Upstream Online. "Because of the short-cycle nature of our investments, we can watch what is happening in the markets, and then build that activity level back up when it makes sense." For more information on Chevron's new approach, see June 15, 2021, article - Big Oil Keeping its Capital Discipline Pledge; February 2, 2021, article - Chevron Braces for Tougher Oil & Gas Market After Brutal 2020; and December 4, 2020, article - Chevron Sharply Reduces Annual Capex Guidance Amid Pandemic.
Click on the image at right for a heat map of natural gas-production projects in Louisiana and in the deepwater Gulf of Mexico that are set to begin construction in the third quarter, from Industrial Info's Geolocator tool.Among the other companies at work in the Gulf of Mexico are Arena Energy LP (The Woodlands, Texas), which is preparing to begin a drilling program in the Main Pass Field that will increase production through a single well, and Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands), which expects to kick off a drilling program in the Mississippi Canyon Field that will comprise two wells. Subscribers can learn more from Industrial Info's reports on the Main Pass and Mississippi Canyon projects.
In addition to the abovementioned capital-spending projects, Industrial Info is tracking a series of maintenance-related projects at U.S. natural gas-production facilities in the third quarter. Subscribers can click here for a list.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
