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Natural Gas Weekly Update

for Week Ending Feb. 22, 2012  |  Release Date:  Feb. 23, 2012  |  Next Release: Mar. 1, 2012

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JUMP TO: In The News | Overview | Prices | Storage

In the News:

Re-Exports of LNG Grew in 2011

Re-exports of liquefied natural gas (LNG) occur when foreign LNG shipments are offloaded into above-ground U.S. storage tanks located on-site at regasification terminals and then subsequently reloaded onto tankers for delivery to other countries. A total of 53.4 billion cubic feet (Bcf) were re-exported in 2011, compared to 32.9 Bcf in 2010. Re-exports of foreign-sourced LNG from U.S. LNG terminals exceeded 12 Bcf in January 2011, equivalent to about 30 percent of U.S. LNG import volumes during that month. There are currently three U.S. LNG terminals that have been granted Federal approval to re-export LNG: Freeport in Texas, and Sabine Pass and Cameron in Louisiana.

U.S. LNG imports and deliveries from terminals to the domestic market are down relative to last year due to increasing domestic natural gas production and average U.S. spot natural gas prices that are well below levels in other major natural gas markets with the capability to import LNG.

Typically, low utilization at these terminals has created available LNG storage capacity in their storage tanks. Re-exportation of LNG lets marketers and suppliers store gas that may have come on the market during times of excess world natural gas supply, while waiting for higher prices before delivering their LNG, typically to the higher-paying markets in Asia, Europe, and South America.

Overview:

(For the Week Ending Wednesday, February 22, 2012)

  • Spot prices at most trading locations across the country posted only small changes for the report week. Spot price changes were mixed, with prices at most locations rising or falling by less than 10 cents. The Henry Hub spot price posted a net increase of 6 cents, rising from $2.54 per million British thermal unit (MMBtu) last Wednesday, February 15, to $2.60 per MMBtu yesterday.
  • At the New York Mercantile Exchange, the near-month (March 2012) contract rose from $2.425 per MMBtu last Wednesday to $2.643 yesterday.
  • Inventories of working natural gas in storage were 2,595 Bcf as of Friday, February 17, according to EIA's Weekly Natural Gas Storage Report (WNGSR). This represents an implied net withdrawal of 166 Bcf
  • The natural gas rotary rig count fell by 4 to 716 last week, according to data reported on February 17 by Baker Hughes Incorporated.
  • more summary data

    Prices:

    Changes in spot prices during the report week were mixed, and small. The Henry Hub price rose 6 cents on the week, from $2.54 per MMBtu last Wednesday to end yesterday at $2.60 per MMBtu. Prices at almost all trading locations showed double-digit increases on Friday, February 17, heading into the long weekend, likely in anticipation of forecasted cold weather, but these gains were reversed in the following trading days. Compared to the rest of the country, several trading points in New England posted relatively large declines for the week. The spot price at the Algonquin Citygate, which serves Boston, declined 20 cents per MMBtu to end the week at $3.07 per MMBtu.

    Spot prices remain well below their year-ago levels. Last year, on February 23, the Henry Hub price settled at $3.83 per MMBtu. The price last year at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City was $8.38 per MMBtu (compared to a price of $2.88 per MMBtu yesterday), and last year's Algonquin Citygate price was $8.80 per MMBtu. Abundant production and storage over the past year have played a role in the price declines.

    Supply declined slightly this week, as production remained flat and pipeline imports and LNG sendout declined, according to data reported by BENTEK Energy, LLC (Bentek). Although overall Canadian imports declined 11.5 percent from last week, imports from Canada to the West increased over the previous week, likely the result of increased power demand in the Pacific Northwest. LNG sendout declined after rising to relative highs last week to meet increased demand from cold weather, according to Bentek.

    Demand declined after rising last week in response to the cold. Domestic consumption fell by 15.5 percent during the week, but was 9.7 percent greater than last year. The year-over-year increase this week was driven by a large increase in use of natural gas for electric power generation. Bentek data show that use of natural gas for power generation is higher than last year in seven of the eight regions it reports. Texas and the Southeast United States, which are particularly dependent on natural gas for power generation, have seen large year-over-year increases in power burn.

    The NYMEX near-month futures contract rose during the week by more than 20 cents. The March 2012 contract increased from $2.425 per MMBtu last Wednesday to $2.643 yesterday, possibly reflecting expectations for a large natural gas inventory withdrawal report. The 12-month strip (the average of the 12 contracts from March 2012 to February 2013) rose from $3.044 last Wednesday to $3.175 yesterday.

    more price data

    Storage

    Working natural gas in storage fell to 2,595 Bcf as of Friday, February 17, according to EIA's WNGSR. This represents an implied net withdrawal of 166 Bcf from the previous week, which is 14 percent more than the 5-year average implied net withdrawal of 145 Bcf. Inventories in all three regions posted declines, with the East region contributing the most to this week's implied net withdrawal, with a decrease of 97 Bcf (a 7.3 percent decline from the previous week's level).

    Stocks were 744 Bcf higher than the 5-year average level of 1,851 Bcf and 753 Bcf higher than last year at this time. Inventories in the Producing Region remain 343 Bcf (52.8 percent) above the 5-year average of 650 Bcf. Stocks in the East and West Regions are also above their 5-year averages by 300 Bcf (32.2 percent) and 102 Bcf (38.1 percent), respectively.

    Temperatures during the week ending Thursday, February 16 averaged 36.1 degrees, 4.3 degrees cooler than last week. National average temperatures were below normal for the first time since November 11 last year, averaging 0.1 degrees colder than the 30-year normal temperature and 0.3 degrees colder than the same period last year. Regionally, temperatures were warmer than normal in the Northeast and the East North Central region, but cooler than normal in the other areas of the country. The average temperatures in the East South Central and West South Central regions in the South were particularly cold, both averaging 3.6 degrees cooler than normal. Heating degree-days nationwide were 0.5 percent above normal and 1.5 percent above last year.

    more storage data



    See also:

2011 LNG Re-Exports

billion cubic feet

Source: U.S. Energy Information Administration based on U.S. Department of Energy, Office of Fossil Energy data



Natural Gas Spot Prices
Spot Prices ($/MMBtu)
Thu,
16-Feb
Fri,
17-Feb
Mon,
20-Feb
Tue,
21-Feb
Wed,
22-Feb
Henry Hub
2.47
2.67
holiday
2.63
2.60
New York
2.77
3.01
holiday
2.94
2.88
Chicago
2.60
2.76
holiday
2.71
2.69
Cal. Comp. Avg,*
2.70
2.84
holiday
2.80
2.80
Futures ($/MMBtu)
March delivery
2.567
2.684
holiday
2.626
2.643
April delivery
2.713
2.824
holiday
2.773
2.775
*Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg.
Source: Natural Gas Intelligence
Natural Gas Futures Prices


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
2/17/12
2/10/12
change
East
1,232
1,329
-97
West
370
381
-11
Producing
993
1,051
-58
Total
2,595
2,761
-166
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(2/17/11)
5-year average
(2007-2011)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
888
38.7
932
32.2
West
265
39.6
268
38.1
Producing
689
44.1
650
52.8
Total
1,842
40.9
1,851
40.2
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending Feb 16)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
234
-28
-48
0
0
0
Middle Atlantic
230
-19
-25
0
0
0
E N Central
259
-11
-6
0
0
0
W N Central
282
8
38
0
0
0
South Atlantic
174
11
7
5
-2
4
E S Central
187
25
8
0
0
0
W S Central
133
22
1
1
-3
-2
Mountain
207
3
25
0
-1
0
Pacific
118
14
19
0
0
0
United States
203
1
3
1
0
1
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Feb 16, 2012

Mean Temperature (F) 7-Day Mean ending Feb 16, 2012

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Feb 16, 2012

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 16, 2012

Source: NOAA/National Weather Service



U.S. Natural Gas Supply - Gas Week: (2/15/12 - 2/22/12)
Percent change for week compared with:
 
last year
last week
Gross Production
7.55%
-0.01%
Dry Production
8.44%
-0.01%
Canadian Imports
-5.46%
-11.54%
      West (Net)
7.72%
1.31%
      MidWest (Net)
10.06%
-14.50%
      Northeast (Net)
-30.96%
-27.65%
LNG Imports
-46.36%
-25.67%
Total Supply
6.32%
-1.27%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (2/15/12 - 2/22/12)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
9.71%
-15.47%
Power
49.01%
-16.80%
Industrial
3.07%
-3.03%
Residential/Commercial
-2.00%
-20.27%
Total Demand
9.61%
-15.24%
Source: BENTEK Energy LLC
Natural Gas Supply


Weekly natural gas rig count and spot Henry Hub

Source: Baker Hughes

Rigs
Fri, February 17, 2012
Change from
 
last week
last year
Oil Rigs
1,272
0.71%
58.27%
Natural Gas Rigs
716
-0.56%
-20.44%
Miscellaneous
6
0.00%
-40.00%
Rig Numbers by Type
Fri, February 17, 2012
Change from
 
last week
last year
Vertical
615
1.99%
19.17%
Horizontal
1,163
-0.68%
19.00%
Directional
216
0.47%
-3.59%
Source: Baker Hughes Inc.

Monthly dry shale gas production

trillion cubic feet

Source: Lippmann Consulting, Inc. Gross withdrawal estimates as of December 2011 and converted to dry production estimates with EIA-calculated average.