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Natural Gas Weekly Update

for week ending September 28, 2016  |  Release date:  September 29, 2016  |  Next release: October 6, 2016  |  Previous weeks

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

In the News:

Sabine Pass liquefaction terminal begins first maintenance

The Sabine Pass liquefaction terminal, the first liquefied natural gas (LNG) facility in the Lower 48 states, began planned maintenance of Trains 1 and 2, the only fully operational trains, on September 20. The maintenance was scheduled to improve performance of the wet/dry flare systems that Trains 1 and 2 share. Both liquefaction trains will be completely shut down during maintenance, which is expected to last approximately four weeks.

Natural gas pipeline deliveries to Trains 1 and 2 increased in the first two weeks of September, averaging 1.2 billion cubic feet per day (Bcf/d), prior to the maintenance startup. This was done to fill the terminal's storage tanks to nearly full capacity as this allows LNG to be held for longer periods by reducing the amount of boil-off.

During maintenance, the terminal may still receive nominal natural gas deliveries ranging from 10 million cubic feet per day (MMcf/d) to 100 MMcf/d as part of the commissioning of Train 3. The commissioning of Train 3 began on August 19, after the terminal operator, Cheniere, received the necessary approval from the Federal Energy Regulatory Commission (FERC). The terminal needs these nominal deliveries to conduct pressure tests of the compressors and to ensure all equipment is working properly in preparation for liquefaction. Train 3 is expected to begin liquefying natural gas after it receives FERC authorization to introduce refrigerants to the system, and is targeted for substantial completion by June 2017.

Since the first cargo left Sabine Pass on February 24, an estimated 113 Bcf of LNG has been exported on 33 tankers from Trains 1 and 2 to 12 countries worldwide. More than half of the U.S. LNG exports so far were shipped to South America and the Caribbean (Brazil, Argentina, Chile, and the Dominican Republic), followed by Asia (India and China), the Middle East (United Arab Emirates, Kuwait, and Jordan), a small volume to Europe (Portugal and Spain), and Mexico. Sabine Pass is a six-train facility with a capacity of 0.59 Bcf/d for each train. Trains 4 and 5 are under construction, and Train 6 has been fully permitted.

Overview:

(For the Week Ending Wednesday, September 28, 2016)

  • Natural gas spot prices fell at most locations this report week (Wednesday, September 21 to Wednesday, September 28). The Henry Hub spot price fell from $3.14 per million British thermal units (MMBtu) last Wednesday to $2.98/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the October 2016 contract expired yesterday at $2.952/MMBtu, down 11¢ from last Wednesday. The November 2016 contract fell to $3.002/MMBtu, down 13¢ from last Wednesday to yesterday.
  • Net injections into storage totaled 49 Bcf, compared with the five-year (2011–15) average net injection of 97 Bcf and last year's net injection of 99 Bcf during the same week. Working gas stocks total 3,600 Bcf, 220 Bcf above the five-year average and 90 Bcf above last year at this time.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 19¢, closing at $5.21/MMBtu for the week ending September 23. The price of natural gasoline, ethane, propane, butane, and isobutane all rose, increasing by 1%, 3%, 6%, 4%, and 4%, respectively.
  • According to Baker Hughes, for the week ending Friday, September 23, the natural gas rig count increased by 3 to 92. The number of oil-directed rigs rose by 2 to 418. The total rig count climbed by 5, and it now stands at 511.

more summary data

Prices/Supply/Demand:

Spot prices decrease at most market locations. During the report week (Wednesday, September 21 to Wednesday, September 28), temperatures moderated across most of the country as the United States transitions to fall weather. Accordingly, the Henry Hub spot price fell 16¢ from $3.14/MMBtu last Wednesday to $2.98 yesterday. At the Chicago Citygate, prices decreased 22¢ from $3.09/MMBtu last Wednesday to $2.87 yesterday.

West Coast prices saw similar declines, with prices at PG&E Citygate in Northern California falling 15¢ over the report week to $3.41/MMBtu yesterday. The price at SoCal Citygate decreased 10¢ from last Wednesday to $2.99/MMBtu yesterday. EIA now publishes daily information on electric prices, electric load, temperatures, and storage levels in Southern California.

Northeast prices decline, with NYC prices hitting record low. The Northeast experienced cooler temperatures for the report week, reducing air conditioning load for the power sector but also prompting some homes to begin heating. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 88¢ from $3.24/MMBtu last Wednesday to $2.36 yesterday. At the Transco Zone 6 trading point for New York City, prices decreased 64¢ from $1.50/MMBtu last Wednesday to $0.86 yesterday. Most notably, on Monday, the Transco Zone 6 New York price fell to $0.77/MMBtu, the lowest average daily price ever recorded by NGI since it started tracking prices in 1998.

Marcellus prices again fall below $1/MMBtu. Tennessee Zone 4 Marcellus spot prices decreased 40¢ over the report week to $0.76/MMBtu yesterday. The price point hit an intraweek low of $0.67/MMBtu on Friday. Prices at Dominion South in northwest Pennsylvania fell 41¢ to $0.79/MMBtu yesterday. Similar to the Tennessee Zone 4 Marcellus price, Dominion South also hit an intraweek low on Friday, falling to $0.71/MMBtu, before increasing somewhat early this week. Marcellus prices generally remained above the $1/MMBtu mark for most of 2016, but they have now fallen back below that threshold, likely because of mild fall weather in the region.

November futures contract price falls, but remains above $3. At the Nymex, the October 2016 contract expired yesterday at $2.952/MMBtu, down 11¢ from last Wednesday. The November 2016 contract fell to $3.002/MMBtu, down 13¢ from last Wednesday to yesterday. The 12-month strip, which averages the November 2016 through October 2017 contracts, fell 11¢ over the report period, to $3.107/MMBtu.

Supply remains flat. According to data from PointLogic, the total supply of natural gas remained the same as last report week, averaging 77.7 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 4% from last week.

Consumption remains flat again this week. Total U.S. natural gas consumption fell by 2% compared with the previous report week, according to data from PointLogic. Power burn declined by 8% week over week, but remains 11% above last year's levels, largely because of new natural gas-fired generation. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption expanded by 14%, with some parts of the Northeast and Rockies experiencing temperatures as low as 40°F at times during the week. Natural gas exports to Mexico went up 1%.

U.S. LNG exports. There were no pipeline deliveries to the Sabine Pass liquefaction terminal this report week because the facility is currently undergoing planned maintenance of Trains 1 and 2. One vessel (LNG-carrying capacity 3.6 Bcf) left the terminal on September 25.

more price data

Storage:

Injections to storage continue at slower-than-normal rate. Net injections into storage totaled 49 Bcf, compared with the five-year (2011–15) average net injection of 97 Bcf and last year's net injections of 99 Bcf during the same week. Working gas stocks total 3,600 Bcf, which is 220 Bcf above the five-year average and 90 Bcf above last year at this time. When the refill season began on April 1, working gas stocks were 874 Bcf above the five-year average.

South Central region working gas stocks continue to decline. Net withdrawals totaled 6 Bcf in the South Central region, with salt dome facilities accounting for net withdrawals of 3 Bcf. For the 10th time in the past 11 weeks, working gas stocks in the South Central region declined. So far in the refill season (April 1–October 31), net withdrawals from storage in the region's salt dome facilities have totaled 48 Bcf, while net injections at the nonsalt facilities have totaled 124 Bcf. These levels compare with the five-year average net injection of 93 Bcf in salt dome facilities and 310 Bcf in nonsalt dome facilities. Working gas stocks at the salt dome facilities in the South Central region are 14% lower last year at this time. Overall, working gas stocks in the South Central region are 9% higher than the five-year average for this time of year.

Net injections fall below range of market expectations, early trading moves prices ahead of release. Estimates of net injections into storage ranged from 52 Bcf to 68 Bcf, with a median of 53 Bcf. For the second week in a row, early trading seconds ahead of the release of EIA's Weekly Natural Gas Storage Report (WNGSR) occurred. Several seconds prior to the WNGSR release, the price of the Nymex contract for November delivery at the Henry Hub was $2.96/MMBtu. Early trading before the release moved the price of the November contract to $2.98/MMBtu, and at the release of the WNGSR, the price of the November futures contract reached $3.00/MMBtu during relatively light trading. Prices reached $3.02/MMBtu within two minutes of the release.

Spread to the January futures price remains close to year-ago levels. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.05/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.38/MMBtu, a difference of 33¢. A year ago, the premium was 32¢.

Temperatures remain higher than normal. Temperatures in the Lower 48 states averaged 73°F, 7°F higher than the normal and 4°F higher than last year at this time. Cooling degree days (CDD) in the Lower 48 states totaled 62, compared with 42 last year and a normal of 32.

more storage data

See also:

Sabine Pass natural gas pipeline flows and LNG exports, February--September*, 2016


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
22-Sep
Fri,
23-Sep
Mon,
26-Sep
Tue,
27-Sep
Wed,
28-Sep
Henry Hub
3.14
3.04
3.05
3.03
2.98
New York
1.16
0.77
1.10
0.98
0.86
Chicago
3.06
2.95
2.99
2.96
2.87
Cal. Comp. Avg.*
3.17
3.10
3.17
3.09
2.99
Futures ($/MMBtu)
October contract
2.990
2.955
2.997
2.996
2.952
November contract
3.061
3.013
3.055
3.050
3.002
*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: (9/22/16 - 9/28/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.4
79.7
82.0
Dry production
71.5
71.7
73.7
Net Canada imports
6.0
5.8
4.9
LNG pipeline deliveries
0.3
0.2
0.2
Total supply
77.7
77.7
78.8

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (9/22/16 - 9/28/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
58.4
59.5
57.7
    Power
29.3
31.8
26.4
    Industrial
19.6
19.4
20.0
    Residential/commercial
9.5
8.3
11.3
Mexico exports
3.5
3.4
3.3
Pipeline fuel use/losses
6.5
6.6
6.4
LNG pipeline receipts
0.0
0.2
0.0
Total demand
68.3
69.7
67.5

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, September 23, 2016
Change from
 
last week
last year
Oil rigs
418
0.5%
-34.8%
Natural gas rigs
92
3.4%
-53.3%
Miscellaneous
1
0.0%
0.0%
Rig numbers by type
Fri, September 23, 2016
Change from
 
last week
last year
Vertical
60
-6.3%
-51.2%
Horizontal
402
2.0%
-36.1%
Directional
49
2.1%
-43.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-09-23
2016-09-16
change
East
874
851
23
Midwest
1,014
985
29
Mountain
233
230
3
Pacific
318
318
0
South Central
1,161
1,167
-6
Total
3,600
3,551
49
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(9/23/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
830
5.3
837
4.4
Midwest
942
7.6
950
6.7
Mountain
200
16.5
193
20.7
Pacific
354
-10.2
338
-5.9
South Central
1,183
-1.9
1,062
9.3
Total
3,510
2.6
3,380
6.5
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Sep 22)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
2
-35
-16
35
34
18
Middle Atlantic
1
-28
-11
38
29
22
E N Central
2
-30
-19
45
35
34
W N Central
7
-29
-14
47
32
21
South Atlantic
0
-9
-2
91
35
30
E S Central
0
-9
-3
89
46
41
W S Central
0
-2
-1
118
44
20
Mountain
15
-26
-7
44
9
4
Pacific
6
-7
0
39
11
-8
United States
3
-20
-9
62
30
20
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Sep 22, 2016

Mean Temperature (F) 7-Day Mean ending Sep 22, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Sep 22, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Sep 22, 2016

Source: NOAA/National Weather Service