The key reason was reduction of gas production at the Haynesville shale formation located in the states of Arkansas, Louisiana and Texas: according to the results of the first nine months of 2024, production there decreased by 12%, and in absolute terms – by 50 million cubic meters per day. Production from the Utica formation in Pennsylvania, New York, Ohio and West Virginia decreased by 10% (by more than 15 million cubic meters per day) over the same period, while production from the Marcellus formation, an Appalachian basin part, remained virtually unchanged. As a result, despite an increase in gas production in the Permian basin (by 45 million cubic meters per day), total shale gas production declined for the first time in a quarter century.
The dynamics of gas production is strongly influenced by falling gas prices. For example, in September 2024, the average gas price at Henry Hub was 15% lower than in September 2023 and 71% lower than in September 2024 ($81 vs $95 vs $278 per thousand cubic meters). The lower prices forced the companies to curtail production in the least profitable wells. According to Baker Hughes, in September 2023, the average daily number of active drilling rigs at the Haynesville formation decreased by 53% compared to January 2023, the latest high. In turn, the Utica Formation’s active rig count halved over the same period, and the Marcellus Formation’s rig count decreased by 36%.
Geologic differences also play an important role. On the Haynesville formation, dry gas is produced, and on the Utica and Marcellus formations, it is dry gas together with gas condensate, while in the Permian basin, gas is produced together with oil. This explains the difference in production dynamics. In the Permian basin, gas production is growing together with oil production, including under the impact of relatively high prices: in the first nine months of 2024, the average price of WTI oil was 3% higher than between January and September 2023 ($77.7 vs $75.1 per barrel).
Overall, shale rocks accounted for 79% of US gas production. Production from conventional reserves increased by 6% (to almost 620 million cubic meters per day) in the first nine months of 2024. As a result, the US total gas production remained at the same level as last year.
