In 2022, annual production of associated-dissolved natural gas (or associated natural gas) increased 9% to 15.5 billion cubic feet per day (Bcf/d) in the major U.S. onshore crude oil-producing regions, mostly due to an 8% increase in crude oil production. Associated natural gas accounted for more than a third of total natural gas production in the Permian, Bakken, Eagle Ford, Niobrara, and Anadarko regions and 14% of all U.S. natural gas production.

Associated natural gas refers to natural gas that is dissolved in crude oil under the pressure of a geologic formation and is then released when the pressure on the crude oil is relieved by bringing it to the surface.

Increasing crude oil production in the Permian region, which spans parts of western Texas and southeastern New Mexico, is driving the growth in associated natural gas production. Currently more oil is produced in the Permian region, the largest of the five major U.S. crude oil-producing regions, than in the other four regions combined. In 2022, production of crude oil increased in the Permian region by 12%. Associated natural gas production increased by 15% in the Permian region to average 10.2 Bcf/d for the year, and it accounted for 56% of all U.S. associated natural gas production. In recent years, new pipeline takeaway capacity additions have facilitated associated natural gas production growth.

Associated natural gas contains higher ratios of natural gas plant liquids (NGPLs) such as ethane, propane, normal butane, isobutane, and natural gasoline than non-associated natural gas. NGPLs are used as fuel for heating and transportation and as feedstocks to produce plastics, resins, and other petrochemicals. Like associated natural gas production, NGPL production has set several consecutive annual records, rising to an annual average of 5.9 million barrels per day in 2022. The Texas Inland region, which includes much of the Permian region, accounted for 53% of total U.S. ethane production and 49% of total NGPL production in 2022, up from 51% of ethane production and 46% of NGPL production in 2021, according to our Petroleum Supply Monthly.