The US government agency The Energy Information Administration reports gas production figures with a two month lag. So yesterday we saw the natural gas production numbers for December 2014 (here). So far, the tend is still upwards–indeed, production has actually been accelerating (click for larger image).
December 2014 dry gas production was up 11.6% year on year, and the 12-month moving average was 5.6% higher year on year, the highest growth since November 2012. Any particular individual month reflects the impact of weather events, but the strength of production over recent months is still noteworthy. Of course, natural gas prices have shown far more resilience than oil prices over the last 6 months. Indeed, up until December, prices were little changed from mid-summer (click for larger image).
However, over the last two months, we have seen a step change downward in Henry Hub prices to around US$3 per million British thermal unit (Btu), a 25% decline from the US$4 seen for much of 2013/14 (apart from a cold winter spike). Source: EIA here.
At this stage, I will restate my definition of a “shale revolution”. To me, you can attach the moniker “revolution” if we see higher production at a lower price. We now have a lower price. Will we continue to see rising production? Watch this space.