Appalachian Natural Gas Supply and Demand Economics (April 2016)

Appalachian Gas Production rose 1.85 BCF/day or 8.5% in the last three months according to EIA. This is perplexing. Rig counts have dropped to historic lows with the latest Baker-Hughes count for Ohio+PA+WV at 39 rigs. Something has to give eventually, right? Storage is near all-time highs but demand has increased due to more gas power plants and more industrial use. Demand should continue with more gas used for summer A/C. Storage injections should eventually slow due to production declines - theoretically.  Some of the new takeway capacity has been delayed - mostly by pipeline opposition. New demand from NGVs and other conversions is small but steady and should grow. New demand from fertilizer and chemical plants is still expected.