US Natural Gas Drillers Expect To Increase Output Next Year: Report

U.S. natural gas producers are poised to ramp up production in 2025 in response to rising demand from liquefied natural gas export plants that is expected to increase prices, according to a report.

Production is on track to fall in 2024 for the first time since the COVID pandemic reduced demand in 2020, Reuters reported, citing data from the U.S. Energy Information Administration's outlook.

Companies began cutting back on production after average spot monthly prices at the Henry Hub benchmark in Louisiana dropped to a 32-year low in March, and have remained low since, the report said.

But rising demand for exports is expected to boost average annual gas prices in 2025 by more than 40% over 2024 levels, Reuters reported.

It said the EIA projects annual average dry gas production will climb from 103.3 billion cubic feet per day (bcfd) in 2024 to 104.5 bcfd in 2025.

Total gas demand is projected to go from 109.9 bcfd in 2023 to 111.2 bcfd in 2024 and 113.0 bcfd in 2025.

The bulk of 2025's expected increase in demand is because of a 14% hike in LNG exports.

LNG exports have been rising an average of 34% per year from 2010 to 2023, Reuters reported, while domestic gas usage has only increased by 2% a year.

To meet the demand, some gas producers said they are expecting to boost output in the fourth quarter and throughout 2025.

"Producers are waiting for higher prices to deliver several bcfd of production held back ... the likely start-up of Plaquemines and Corpus Christi Stage 3 should lead to much higher flows next year," Bank of America analysts said, according to Reuters.

The average annual Henry Hub gas prices are forecast by analysts to hit a three-year high of around $3.27 per million British thermal units in 2025.