In 2020, annual production of associated-dissolved natural gas (or associated gas)—which is natural gas produced from oil wells—declined in the combined five major U.S. onshore crude oil-producing regions for the first time since 2016. The share of associated gas produced in these five regions (Permian, Bakken, Eagle Ford, Niobrara, and Anadarko) declined by 1.5% year over year and averaged 37.7% of natural gas production in the regions. Associated gas production averaged 14.2 billion cubic feet per day (Bcf/d) in 2020 (a 4.1% decline from 2019) amid a 9.2% drop in oil production in these regions.
When natural gas dissolves in crude oil under the pressure of a rock formation, associated gas is released when the pressure on the crude oil is relieved by bringing it to the surface. Until 2020, the share of associated gas in these five regions, along with oil production, had been increasing. Between 2016 and 2019, associated gas production grew at its most rapid pace (6.1 Bcf/d) because of high levels of new crude oil production. Production of both crude oil and associated gas in 2020 declined with decreased demand for crude oil following responses to the COVID-19 pandemic.
In 2020, the Permian region, which spans parts of western Texas and eastern New Mexico, produced 50% of total U.S. associated gas. Only the Permian region increased its production of both crude oil and associated gas in 2020, but these increases did not offset declines in both crude oil and associated gas production in the other four regions. Some of this increase in associated gas production can be attributed to greater natural gas takeaway capacity in the Permian region.
Associated gas contains natural gas plant liquids (NGPLs) such as ethane, propane, normal butane, isobutane, and natural gasoline. NGPLs are used as feedstocks to produce plastics, fibers, and other products; they are also used for heating and for transportation. Despite the 2020 decline in associated gas, years of rising associated gas production led to record high volumes of NGPL production in 2020, driven by high ethane demand. Ethane consumption has been growing steadily both domestically and through exports since 2014.