U.S. Says Gas Output to Rise in 2012, 2013 on Shale Growth

Natural gas production in the U.S. will rise to record levels this year and in 2013 on increased output from shale formations, the government said.

Marketed gas production will average 67.34 billion cubic feet a day this year, up from 65.92 billion last year, the Energy Department said in its monthly Short-Term Energy Outlook, released today in Washington. The department had pegged 2012 output at 67.72 billion in its December report. Production in 2013 was estimated at 68.04 billion cubic feet a day.

Gas at the benchmark Henry Hub in Erath, Louisiana, will average $3.53 per million British thermal units this year, down from the previous estimate of $3.70, according to the report from the department’s Energy Information Administration..

“We are definitely seeing record production this year,” said Howard Gruenspecht, acting administrator for the Energy Department, said today on a conference call. “We see it rising a little bit more next year but not as fast a rate as it rose from 2010 to 2011.”

U.S. stockpiles may climb to a record 3.96 trillion cubic feet at the end of October 2012 and 3.99 trillion a year later, according to the report.

“Unusually warm winters or mild summers could potentially strain available storage capacity over the next two years, leading to temporary shut-in production and lower prices for natural gas,” the department said.

Natural gas for February delivery fell 9 cents, or 3 percent, to $2.921 per million Btu at 1:28 p.m. on the New York Mercantile Exchange.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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