Natural Gas

‹ See All Natural Gas Reports

Natural Gas Weekly Update

for week ending February 10, 2016  |  Release Date:  February 11, 2016  |  Next Release: February 18, 2016

Previous Issues

Week:  (View Archive)


JUMP TO: In The News | Overview | Prices/Demand/Supply | Storage

In the News:

New Northeast pipelines help boost gas production 18%

In just the past six weeks, natural gas production in the Northeast has averaged 18% more than the year-ago period, according to Bentek Energy. The area includes the prolific Marcellus and Utica shales.

New infrastructure additions coming online in the past several months have likely contributed to year-over-year growth. But while Marcellus production has grown rapidly over the past several years, pipelines to move these increasing volumes out of the Northeast to consumption centers have not grown as quickly, largely because infrastructure projects have long lead times. Insufficient takeaway capacity will generally result in lower prices in the producing region and higher prices in the receiving region than would have been expected otherwise.

However, there were several important projects that came online in late 2015 or early 2016, totaling 4.2 billion cubic feet a day (Bcf/d) of flowing-gas capacity. They include:

  • The reversal project for the Rockies Express Pipeline (REX), which began its first westbound flows in June 2014, brought additional capacity online in September 2015. With its recent expansion, REX can flow natural gas bidirectionally between Ohio and Indiana.
  • In late 2015, Texas Eastern Transmission Company's (Tetco) OPEN project added 550 million cubic feet per day (MMcf/d) of westbound pipeline takeaway capacity out of Ohio.
  • Columbia Gas Pipeline's East Side Expansion is a 310-MMcf/d project that flows natural gas produced in Pennsylvania to Mid-Atlantic markets.
  • Tennessee Gas Pipeline's Broad Run Flexibility Project is a 590-MMcf/d project originating in West Virginia that moves natural gas to the Gulf Coast states.
  • Tetco's Uniontown-to-Gas City project flows up to 425 MMcf/d of natural gas produced in the Marcellus region to Indiana.
  • Williams Transcontinental Pipeline's Leidy Southeast project provides additional capacity to take Marcellus natural gas to Transco's mainline, which extends from Texas to New York. From there, the natural gas serves both Mid-Atlantic and Gulf Coast markets.

Overview:

(For the Week Ending Wednesday, February 10, 2016)

  • Natural gas prices were mixed this report week (Wednesday, February 3, to Wednesday, February 10), with prices on the West Coast and in the Rockies declining, and prices elsewhere generally increasing. The Henry Hub spot price rose from $2.06 per million British thermal unit (MMBtu) last Wednesday to $2.13/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the near-month (March 2016) contract rose by less than 1¢ from $2.038/MMBtu last Wednesday to $2.046/MMBtu yesterday.
  • Working gas in storage decreased by 70 billion cubic feet (Bcf) over the storage report week, declining to 2,864 Bcf as of Friday, February 5. Working gas stocks were 25% and 23% above the year-ago and five-year (2010-15) average levels for the week, respectively.
  • The total oil and natural gas rig count declined by 48 units, with 571 units in service for the week ending Friday, February 5, according to data from Baker Hughes Incorporated. The oil rig count decreased by 31 units to 467, and the natural gas rig count fell by 17 units to 104. This is the fifth consecutive double-digit weekly decline and the lowest recorded natural gas rig count in the Baker Hughes dataset, which goes back to 1987.
  • The natural gas plant liquids (NGPL) composite price at Mont Belvieu, Texas, rose by 4.0% to $3.81/MMBtu for the week ending Friday, February 5. The spot prices of liquid products were mixed this week; ethane and natural gasoline were down 2.4% and 0.8%, respectively, and propane, butane, and isobutane were up 8.3%, 8.0%, and 7.4%, respectively.

more summary data

Prices/Demand/Supply:

Natural gas prices mixed. Temperatures this report week were a bit colder in the Midwest and the Gulf Coast and a bit warmer on the West Coast and Rockies, and price movements generally corresponded to changes in weather. The Henry Hub spot price rose from $2.06/MMBtu last Wednesday to $2.13 yesterday, February 10. At the Chicago Citygate, the spot price rose from $2.07/MMBtu last Wednesday to $2.17 yesterday. In contrast, the spot price at the Opal Hub in Wyoming opened the report week at $2.01/MMBtu and ended yesterday at $1.88. At Malin in southern Oregon, the price fell from $2.04/MMBtu to $1.93 yesterday. At SoCal Citygate, the price fell from $2.29/MMBtu to $2.17 yesterday.

The leak at the Southern California Gas Company's Aliso Canyon storage field continues, but the rate of leakage has been decreasing. The company has drilled an offset well to near the bottom of the leaking well, and is hoping to enter the wellbore and plug the leak. The company anticipates the leak will be stopped by late February or possibly sooner.

Northeast prices increase dramatically. This week prices at both Boston and New York City rose dramatically on increased demand stemming from the cold weather. The Northeast also experienced a snowstorm early in the report week, which knocked out power for more than 200,000 customers. At the Algonquin Citygate, which serves Boston, prices more than tripled, rising from $1.90/MMBtu last Wednesday to $6.50 yesterday. At Transcontinental Pipeline's Zone 6 trading point serving New York City, prices followed the same pattern, rising from $1.79/MMBtu last Wednesday to $5.99 yesterday.

Marcellus prices rise. The cold weather in the Northeast pushed Marcellus prices up somewhat for the report period. At Dominion South in northwest Pennsylvania, prices began at $1.35/MMBtu last Wednesday and ended the report week at $1.53 yesterday. Similarly, on Transco's Leidy Line in northern Pennsylvania, prices rose from $1.22/MMBtu to $1.32 Wednesday-to-Wednesday.

Nymex prices flat. The price of the Nymex March 2016 contract was essentially flat this week, rising by less than 1¢ from $2.038/MMBtu last Wednesday to $2.046 yesterday. The price of the 12-month strip (the 12 contracts between March 2016 and February 2017) fell by less than 1¢, from $2.384/MMBtu last Wednesday to $2.376 yesterday.

Supply rises. Despite the historically low rig count, dry natural gas production rose 0.5% week-over-week and is 1.2% higher than the same week last year, according to Bentek data. U.S. imports of natural gas from Canada rose by 13.9%, driven by imports into the Northeast. The Northeast moved from exporting gas to Canada last Thursday to importing more than 1 Bcf yesterday alone. LNG sendout increased by 10.9%, but is a small contributor to overall supply.

Demand increases with cold weather. U.S. consumption increased by 12.8% for the report period, driven by a large increase in residential/commercial consumption related to the cold weather. According to Bentek data, residential/commercial consumption, which is largely used for heating, increased by 16.2%. Industrial consumption rose 3.5%, and consumption of natural gas for electric power generation rose 15.9%. U.S. exports of natural gas to Mexico decreased slightly, falling by 2.2%, but are 42.7% higher than a year ago.

more price data

Storage

Net withdrawals from storage are below the five-year average and last year's withdrawals. The net withdrawal from storage for the week ending February 5, was 70 Bcf compared with 153 Bcf a year-ago. The five-year (2010-15) average for the same week was 168 Bcf. This week's net withdrawal ended a five-week streak of triple-digit storage draws.

Storage withdrawals for the storage week are within the range of analyst expectations. Expectations for the report week had storage withdrawals ranging from 70 to 105 Bcf and averaging about 80 Bcf. Prices on the Nymex for the near-month futures contract for March delivery at the Henry Hub fell about 4¢/MMBtu to $2.01/MMBtu immediately following the release of the EIA Weekly Natural Gas Storage Report (WNGSR).

Working gas stocks edge back above the five-year (2011-15) maximum. This week's report marked a rebound above the five-year (2011-15) maximum level for the report week, after dipping below the five-year maximum last week. Working gas stocks have at least equaled the five-year maximum in 14 out of 15 weeks since October 30, 2015.

Temperatures during the storage report week are warmer than normal. Temperatures in the Lower 48 states averaged 42°F during the storage week, 8°F warmer than the normal temperature for the week, as well as for last year at this time. Cumulative population-weighted heating degree days since November 5, 2015, are 13% below the normal level.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
04-Feb
Fri,
05-Feb
Mon,
08-Feb
Tue,
09-Feb
Wed,
10-Feb
Henry Hub
2.05
2.08
2.22
2.17
2.13
New York
2.07
2.15
2.90
3.46
5.99
Chicago
2.06
2.09
2.27
2.23
2.17
Cal. Comp. Avg,*
2.09
2.06
2.16
2.09
2.03
Futures ($/MMBtu)
March contract
1.972
2.063
2.140
2.098
2.046
April contract
2.062
2.137
2.189
2.149
2.111
*Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (2/3/16 - 2/10/16)
Percent change for week compared with:
 
last year
last week
Gross production
1.18%
0.46%
Dry production
1.17%
0.46%
Canadian imports
8.15%
13.91%
      West (net)
15.20%
1.51%
      Midwest (net)
72.53%
13.13%
      Northeast (net)
-58.58%
206.34%
LNG imports
-15.27%
10.91%
Total supply
1.56%
1.41%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (2/3/16 - 2/10/16)
Percent change for week compared with:
 
last year
last week
U.S. consumption
2.7%
12.8%
Power
21.6%
15.9%
Industrial
0.5%
3.5%
Residential/commercial
-5.3%
16.2%
Total demand
3.7%
12.2%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, February 05, 2016
Change from
 
last week
last year
Oil rigs
467
-6.22%
-59.04%
Natural gas rigs
104
-14.05%
-66.88%
Miscellaneous
0
0.00%
-100.00%
Rig numbers by type
Fri, February 05, 2016
Change from
 
last week
last year
Vertical
60
-18.92%
-74.25%
Horizontal
458
-5.95%
-57.90%
Directional
53
-8.62%
-60.74%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2016-02-05
2016-01-29
change
East
620
641
-21
Midwest
739
767
-28
Mountain
151
159
-8
Pacific
381
382
-1
South Central
1,347
1,340
7
Total
2,864
2,934
-70
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(2/5/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
508
22.0
524
18.3
West
581
27.2
589
25.5
Producing
130
16.2
144
4.9
Total
2,291
25.0
2,321
23.4
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Feb 04)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
170
-103
-166
0
0
0
Middle Atlantic
182
-80
-121
0
0
0
E N Central
201
-88
-95
0
0
0
W N Central
225
-76
-75
0
0
0
South Atlantic
116
-61
-73
10
3
6
E S Central
101
-78
-77
1
0
1
W S Central
78
-50
-43
6
2
6
Mountain
233
12
61
0
-1
0
Pacific
127
15
58
0
0
0
United States
163
-54
-54
3
1
2
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Feb 04, 2016

Mean Temperature (F) 7-Day Mean ending Feb 04, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Feb 04, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 04, 2016

Source: NOAA/National Weather Service