Gas plant capacity, production to increase, EIA says

by Jeff Della Rosa ([email protected]) 506 views 

U.S. natural gas production and gas-fired power plant capacity are projected to rise in 2023 and 2024, according to the U.S. Energy Information Administration (EIA). Through 2025, more than 25 gas-fired power plants are expected to come online, largely near gas-producing regions.

Natural gas production in the lower 48 states is expected to increase by 5% in 2023 and 2% in 2024. Most of the production growth can be attributed to the Permian region, which spans southeastern New Mexico and western Texas. Improved well productivity and higher crude oil prices are expected to contribute to increased drilling activity, leading to a rise in natural gas production.

The Permian region accounts for one-quarter of all marketed natural gas production in the lower 48 states. Production there is expected to rise by 11% in 2023 and 6% in 2024.

Most of the region’s natural gas production is associated natural gas production from oil wells. According to the EIA, crude oil price changes affect producers’ decisions on whether to increase or decrease drilling activity there.

Advances in hydraulic fracturing and horizontal drilling techniques have improved U.S. oil and gas production. The length of the horizontal, or lateral, section is key to well productivity. In the Permian region, the section has increased from an average length of less than 4,000 feet in 2010 to more than 10,000 feet in 2022.

Wells typically produce the most natural gas in their first month of operation. In the Permian region, wells have produced an average of 1,849 million cubic feet of natural gas in the first month of operation. That is up from 1,829 million cubic feet in 2022 and 1,301 million cubic feet in 2017.

So far in 2023, natural gas production has risen in the Permian region as the rig count has declined. According to Baker Hughes, the number of active rigs there has fallen by 31 to 322 since the start of the year. As of Oct. 13, the U.S. active rig count has fallen to 622, down by 147 from this time last year. However, the count is up by three from Oct. 6.

EIA expects the price of West Texas Intermediate crude oil to rise by 4.5% to an average of $83.22 per barrel in 2024 from $79.65 per barrel in 2023. The increase can be attributed to Saudi Arabia’s extended crude oil production cuts.

As the higher oil prices contribute to increased oil and associated natural gas production, gas-fired power plant capacity is projected to rise by 8.6 gigawatts in 2023, up from 5.6 gigawatts in 2022. The capacity additions started to rise in 2022 after falling for three years.

So far in 2023, 10 natural gas plants have come online, adding 6.8 gigawatts of capacity. Six more are expected to start operating by the end of this year, bringing online another 1.6 gigawatts of capacity.

Between 2024 and 2025, 20 more gas plants are expected to come online, adding 7.7 gigawatts of capacity. Most of the new capacity is expected to be added near the Gulf Coast and Appalachia natural gas-producing regions and in Florida.