US Gas Producers Await LNG Boom to Drive 2025 Production Surge
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US gas producers are poised to ramp up production in 2025 as supply-demand fundamentals tighten, but the timing and extent of this increase will hinge on winter severity and the ramp-up of new liquefied natural gas (LNG) export projects, according to market players, as reported by S&P Global.
The year 2024 was characterized by a persistent gas oversupply and weak prices, pushing operators to curtail production. In February, NYMEX Henry Hub futures plunged below $1.60/MMBtu, prompting operators to defer well completions and turn-in-lines. Throughout the year, operators further slowed activity by reducing rigs or, in the case of Coterra Energy, suspending gas-directed drilling altogether.
Despite a recent uptick in prices and volumes as winter approaches, operators remain cautious, with many deferring gas well completions until next year. Several companies, including Antero Resources, EOG Resources, Range Resources, and Expand Energy, have indicated plans to continue deferring gas wells through year-end in anticipation of improved pricing.
Range Resources CEO Dennis Degner told analysts that weather patterns will play a key role in determining when to commence production from wells currently in progress. Recent cold weather has boosted demand for gas-fired heating, leading to significant draws from Lower 48 gas storage and a price rebound in gas futures.
However, Degner also emphasized the need for further commissioning and utilization of LNG infrastructure. Most operators anticipate a more favorable environment in 2025 as several new LNG export projects come online. Venture Global's Plaquemines LNG facility has already begun increasing feedgas intake and LNG production.
BofA Securities commodity analysts project that tightening gas balances and robust demand growth will characterize 2025 as capital expenditure cuts take effect. The analysts estimate a 2.8 Bcf/d increase in gas production next year, alongside a 3.1 Bcf/d rise in demand.
Currently, production remains below last winter's peak near 106 Bcf/d but is on track to end December at around 104 Bcf/d, according to S&P Global Commodity Insights. Looking ahead, Commodity Insights analysts project monthly production to exceed 105 Bcf/d by May 2025 and surpass 107 Bcf/d by November 2025.
LNG Project Timeline
The phased commissioning of new LNG export projects is crucial to the expected tightening of the gas market. Venture Global's Plaquemines LNG facility is already shipping its first cargo, while Cheniere Energy's 10 million mt/year Corpus Christi Stage 3 expansion in Texas is expected to produce first LNG by year-end.
The 18 million mt/year Golden Pass LNG facility, a joint venture between ExxonMobil and QatarEnergy, is slated to start up in late 2025. Commodity Insights projects that LNG feedgas demand will rise from 13.2 Bcf/d in 2024 to nearly 16 Bcf/d in 2025 and over 19 Bcf/d in 2026.
Some market participants warn that the operator pullback in 2024 could create a market imbalance if demand grows rapidly. Commodity Insights analysts anticipate that production will need to "play catch-up" throughout next year to keep pace with an estimated 6 Bcf/d increase in US Lower 48 LNG exports between October 2024 and March 2026.
Gabriele Sorbara, an energy equities analyst with Siebert Williams Shank, suggests that a significant mismatch between supply and demand is possible in 2025 if a particularly cold winter depletes gas storage. However, he believes that the imbalance is more likely to materialize in later years.