On March 29, the U.S. Department of Energy's Energy Information Administration (EIA) released its monthly report on U.S. natural gas production. The most interesting item wasn't in the data itself -- the declines we've been patiently waiting for were still missing in action -- but a heads-up on pending revisions to the methodology used in assembling this data. It seems the government figures are not reliable, as some industry players have been suggesting for some time now. Oops.
The EIA said at the time that some revisions would be "significant," but it didn't indicate whether they would be positive or negative. Yesterday, an official confirmed that the current model overestimates production in Texas and Louisiana. New figures for February and revised numbers for January will be calculated according to the new methodology and released at the end of April.
Texas is by far the biggest gas producer in the country, at what is reported to be around 20 billion cubic feet (Bcf) per day on a gross basis. That equates to more than one-fourth of production in the lower 48 states. Courtesy of booming Haynesville shale wells brought online by the likes of Petrohawk Energy
I gave EOG and Chesapeake Energy
The independents may be somewhat vindicated by this revelation, but it's not yet clear how big an impact we'll see from the EIA revision. Just because the government got it wrong doesn't mean that these guys weren't wrong also. This winter, the weekly gas storage numbers told the exact same story of oversupply as the production data.
While gas in storage receded to more normal levels following Snowpocalypse 2010, a Halliburton
In short, I'm not convinced that this forthcoming revision alone is enough to lift the natural gas market out of its doldrums.
Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Fool owns shares of Chesapeake Energy. The Motley Fool has a disclosure policy.