Appalachian Natural Gas Supply and Demand Economics (latest July 2016)

Gas Futures continue to look good for 2017. Electricity consumption and demand for natural gas has been up consistently. New LNG export demand is slated for late summer/early fall. DUC inventories continue to fall as more wells are completed. More takeaway capacity is coming, mainly in 2017 and beyond. Natural gas exports to Mexico continue to increase while imports from Canada have been decreasing. Associated gas from oil wells has decreased as less oil wells have been drilled. Industrial and commercial natural gas use is forecasted to increase. Residential use as well as overall electricity use are still weather dependent, particularly gas burned for heat. Rigs have yet to increase in Appalachia but several companies have announced plans to return to drilling and rig counts are expected to come up significantly this fall.