Annual US natural gas production drops in 2020

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Annual U.S. natural gas production dropped by 1% in 2020 from the previous year, but production in Appalachia stayed strong.

Gross withdrawals nationwide averaged 111.2 billion cubic feet per day in 2020, according to the U.S. Energy Information AdministrationThat’s down 0.9 billion cubic feet per day from 2019.

Production in the Appalachian region, though, increased in 2020. Ohio, Pennsylvania and West Virginia produced 33.6 billion cubic feet per day in 2020, an increase over 2019 production of 32.1 billion cubic feet per day.

West Virginia actually saw the largest jump in natural gas production, increasing by 20%, or about 1.2 billion cubic feet per day, over its 2019 production levels. 

Production in Pennsylvania also increased, by 1 billion cubic feet per day. Ohio saw a slight decrease, of 0.7 billion cubic feet per day. 

Causes

The slight drop of national natural gas production is a result of the industry’s record success in the previous two years, combined with a warm winter and the pandemic. 

The industry came into 2020 with a glut of gas. Production hit record highs in both 2018 and 2019.

That drove prices down. The spot price at national benchmark Henry Hub, in Louisiana, averaged $2.57 per million British thermal units in 2019. That was the lowest annual average price since 2016.

Combine that with the demand drops from the relatively mild winter and responses to the COVID-19 pandemic, and prices went down even further.

Prices dropped to an average of $1.74 per million British thermal units in March 2020.

Consumption falls

Consumption of natural gas dropped too in 2020, compared with the previous year, according to the U.S. Energy Information Administration. It fell in three of four consumption sectors. 

Industrial consumption decreased by 2%. Residential consumption dropped by 7%. Commercial consumption, which includes restaurants, hotels and schools, decreased by 11%. 

The only place it increased was in the electric power sector. Electric power generation saw a 2% increase in natural gas consumption in 2020. Electric power generation is the largest piece of the natural gas consumption pie. 

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