US gas production nears record high as E&Ps relay caution about growing too fast

US natural gas output stands near an all-time high as a period of strong demand and improved prices enable a production resurgence, but some producers are already communicating their intent to keep overall growth limited in 2025 until seeing a sustained call from the market for more supply.

Since the latest freeze-off event around Martin Luther King Jr. Day, during which production dropped below 100 Bcf for a handful of days, output has recovered and averaged 106 Bcf/d over the latest weekend, S&P Global Commodity Insights' dry gas model estimated as of Feb. 3.

Volumes from the Appalachian Basin have a significant impact in carrying the overall US balance higher. In that region, production over the last seven days has come in at nearly 36 Bcf/d, up about 1.7 Bcf/d, or 5%, compared with the prior week. Single-day volumes at 36.3 Bcf over each the last several days mark highs not recorded since winter 2023-2024.

Producers in Texas have also contributed to higher volumes. Through Feb. 3, Texas production was up more than 1 Bcf/d week over week, with output climbing back to exit-2024 levels near 29.5 Bcf/d, Commodity Insights data showed.

Fundamentals, pricing

Strong seasonal gas demand and rising demand for LNG feedgas have tightened gas market fundamentals in recent weeks, supporting additional supply and generally improving the year-ahead outlook for US gas producers. The Platts-assessed 2025 Henry Hub forward strip was last marked Jan. 31 at $3.52/MMBtu, relative to 2024's average cash settlement of $2.24 at the benchmark, Commodity Insights data showed.

In the Northeast, where operators dialed back production at various periods in 2024, prices among key trading locations are well above the floors operators set for themselves regarding curtailment activities. In the fall, EQT said its price trigger for producing or not at full capacity is $1.50/MMBtu at Texas Eastern, M-2. The index averaged $4.40/MMBtu in January and was last assessed Jan. 31 at $2.74.

Fellow Appalachian producer Coterra Energy pegged its price point for gas curtailments at below $1.80/MMBtu at the Platts-assessed Transco, Leidy Line Receipts. The Leidy index averaged $4.35/MMBtu over the last month, Commodity Insights data showed.

More broadly, the Appalachian regional average spot price month to date is $3.89/MMBtu, up about 87% from Q4 2024's average, Commodity Insights data showed. Operators selling into other markets, including West Texas, have also seen significantly higher prices than they saw in much of 2024.

Outlook

At a US level, weather conditions have moderated since the Martin Luther King Jr. weekend freeze, when the US gas market notched record demand, but the latest forecasts calling for return of below-normal temperatures in the coming weeks.

Beyond the winter, however, public producers both in Appalachia and in the Haynesville Shale have recently expressed that they will be careful not to chase production growth too early.

"We need to wait and see kind of where the industry production levels are coming out of winter," as well as where US gas storage levels end up at the end of the season, Alan Shepard, CFO of Appalachian producer CNX Resources, told analysts during the company's quarterly earnings call Jan. 31.

"If prices stay high or go higher, you could see us accelerate some activity and bring up some more volumes, but it's too early to tell at this point," he said.