U.S. Natural Gas Production Stable for 2008

WASHINGTON — Natural gas production this year is expected to reach the highest level seen since the mid-1970s, despite the damage inflicted by hurricanes Gustav and Ike to operations in the Gulf of Mexico, a trade group said today.

And that high production, combined with a stagnating U.S. economy and a winter similar to last year, should translate into a relatively stable wholesale price environment this winter, the Natural Gas Supply Association said.

"Federal forecasters anticipate this will be a slightly warmer than normal winter, with about the same number of heating degree days as last winter," noted Patrick Kuntz, the Gas Supply Association's chairman and Marathon Oil Co.'s vice president of natural gas and crude oil sales.

"However, this is the most difficult factor to predict, and the severity of winter weather may likely have the biggest, single impact on the market," Kuntz siad.

Natural gas producers are expected to drill 750 more wells this year than last year and twice as many as in 2002, the Gas Supply Association said.

Indeed, gas production is expected to increase nearly 8 percent, thanks, in part, to large-scale development of "unconventional" gas production from shale and tight stands formations, according to a study conducted by Fairfax, Va.-based ICF International.

Those expansions have helped offset produciton losses in the Gulf of Mexico, where the U.S. Minerals Mangement Service reports some 46 percent of the gas production remained shut-in, three weeks after Ike blew through.

Gas demand this winter is expected to rise about 2 percent over last year, according to a study by Energy Ventures Analysis.

The nation will enter the heating season with a healthy inventory of 3.45 trillion cubic feet, the Gas Supply Association said. That's down about 3 percent from last year, when inventories were at an all-time high.

david.ivanovich@chron.com