Great Headline, Better Story -- Natural Gas Story; Not About The Bakken

Don sent me a very interesting story. Interesting only because the headline seems to overstate the facts.

First, the headline: US natural gas glut may be slowly coming to an end says EIA.

Now the data points from the article: no, not yet.

Another quote, first: “It looks like we are finally at the end of that string,” said Adam Sieminski, administrator of the U.S. Energy Information Administration.

In fact, "the EIA shows production growing a tiny bit, less than 1 percent, in 2013 to 69.5 billion cubic feet a day before trailing down to 69.5 Bcf/d in 2014."

That's a direct "cut and paste" from the article. So unless there's a typo in the article, or my eyes are playing tricks, I'm missing something. Again, for those who missed it the first time: "the EIA shows production growing a tiny bit, less than 1 percent, in 2013 to 69.5 billion cubic feet a day before trailing down to 69.5 Bcf/d in 2014."

There are four points made so far:

1) the EIA says the natural gas glut is coming to an end
2) but, according to an EIA spokesman, natural gas production will actually increase a bit first (sort of reminds me of the "I voted against it before I voted for it"; I have trouble following bureaucratic doublespeak -- maybe he means demand will go up more than production and thus the glut will start to go down
3) natural gas production will grow to 69.5 bcf/d in 2013,
4) before trailing down to 69.5 bcf/d in 2014. 

Okay. 

But that isn't even the best part of the story. According to the article, natural gas production is going to decrease from 69.5 bcf/d in 2013 to 69.5 bcf/d in 2014 because rigs are being stacked (as they like to say):

On December 28th, there were 431 natural gas rigs operating in the U.S. compared with 811 at the start of 2012. [431 is more than 50% of 811.]

In Colorado, the rig count is down 28 percent in the last 12 months to 55 – although that number includes an uptick in rigs drilling for oil in Niobrara formation.

Pricing:

EIA projects that in 2013 the spot price of natural gas will rise to an average $3.74 per million BTUs and $3.90 in 2014.

The article was all about production, nothing about consumption, so perhaps that's where the disconnect is. If production stays the same after cutting rigs significantly, the increased demand for natural gas (due to the demise of the coal industry in this country) may "decrease" the glut.