September 14, 2024
Raw associated gas is simply natural gas that is produced from wells targeted at crude oil; it is usually separated right at the wellhead. Historically, associated gas only represented a small portion of total US natural gas supply; however, it now accounts for about 23% of the total due to increased oil production primarily from tight sands. Incorrys expects the market share of associated gas to increase further into the forecast period as oil producers continued to focus on unconventional tight sands.
Incorrys analyzed and forecast raw associated gas production, primarily from tight oil basins which represent about 67% of total oil and lease condensate production. Note that most associated gas found in Alaska is re-injected while production from other basins, or from condensate wells, is not forecast.
US associated gas production, in select basins, grew over 25% annually from just 1.5 Bcf/d in 2010 to 28 Bcf/d in 2023, driven primarily by the increase in the gas/oil ratios within tight oil basins. In 2023, the Permian basin, located in west Texas and southeast New Mexico, was the largest producer of associated gas accounting for two-thirds of the total, or 18 Bcf/d; not unexpected since the Permian basin is also the largest oil producing region in the US. The Williston, located in North Dakota and Montana, was the second largest contributor at 3 Bcf/d (12%).
* Does not Include associated gas production from condensate wells.
Incorrys is forecasting US associated gas production to continue to grow well into the next decade peaking at almost 38 Bcf/d around 2035; up 33% from 2023. Depending on the longer-term global demand for oil, Incorrys does see potential upside to the forecast. Again, much of the forecast growth is driven by the Permian basin which reaches about 29 Bcf/d at its peak, almost 80% of the total US associated gas production. The Williston remains the 2nd largest producer reaching almost 4 Bcf/d by the middle of the 2030s, about 10% of the total.