October 13, 2016 / 2:16 PM / 3 years ago

U.S. natgas production to decline for first year since 2005: EIA STEO

(Reuters) - The U.S. Energy Information Administration on Thursday projected year-over-year dry natural gas production in 2016 would fall for the first time since 2005 as low energy prices reduced drilling activity, according to its Short Term Energy Outlook (STEO).

EIA reduced its output projection for 2016 to 72.49 billion cubic feet per day (bcfd) in its October outlook from 74.06 bcfd in September. That compared with an all-time high of 74.14 bcfd in 2015.

EIA forecast dry gas production would return to a record high in 2017, rising to 76.23 bcfd.

The last time year-over-year gas production declined was in 2005 when Hurricanes Katrina and Rita slammed into the Gulf Coast, damaging energy infrastructure.

In 2005, more than 20 percent of annual U.S. dry gas output of 49.45 bcfd came from the federal waters in the Gulf of Mexico.

Since then, producers have figured out how to use horizontal drilling and hydraulic fracturing and other technologies to unlock more gas trapped in shale rocks.

Today, the seven biggest U.S. shale fields provide more than 60 percent of the nation’s dry gas production, while the Gulf of Mexico accounts for just 4 percent of the total.

EIA also forecast U.S. gas consumption would slip to 75.97 bcfd in 2016 versus the 76.38 bcfd it forecast in September.

That would still top the 2015 record high for gas demand of 74.81 bcfd and would be the seventh annual record in a row.

EIA forecast gas demand in 2017 would rise to a new all-time high of 76.73 bcfd.

Reporting by Scott DiSavino; Editing by Jonathan Oatis

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