US Lower 48 Associated Gas Outlook

Since the start of the tight oil revolution, associated gas has fuelled a large portion of production growth in the Lower 48 natural gas markets, keeping pressure on Henry Hub pricing. Given the decline in oil-based drilling and consequently turnover in production, we expect this driver to disappear from the market over the next two years while the Northeast is still in process of being de-bottlenecked. The following slides show the effect which we expect this to have on production and pricing. Additionally we looked at potential pricing consequences outside of our base case scenario in the long run once infrastructure constraints disappear and the market is met with a lower and flatter dry gas supply curve.