The Marcellus Shale Formation in the Eastern US has had an unexpected increase of natural gas produced in the region. Data provided by Pennsylvanian shale operations indicates that government forecasts were well below the actual amount of natural gas produced.
March will see production levels around 17.4 billion cubic feet per day, which is about 11 percent higher than government agencies had predicted. This is partially due to the fact that natural gas companies are encountering difficulties when attempting to choke the flow of gas from the Marcellus source. Choking a well effectively enables companies to extract more gas when market conditions are favorable and stifle production when the market is not beneficial. It can also be used to slow the flow of gas if the capacity to store or transport gas is limited.
The opening of new pipelines also encourages higher production, as companies are able to send their natural gas to locations where it is in demand. The higher production levels from this region indicate that it is going to take longer than analysts had previously thought to slow down the flow of gas from the Marcellus. Of course, higher production during these times is harmful to the price of the product, as the consequences of oversupply are still being felt.
Article written by HEI contributor Timothy McNally.