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Natural Gas Weekly Update

for week ending April 17, 2019   |  Release date:  April 18, 2019   |  Next release:  April 25, 2019   |   Previous weeks


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

In the News:

Liquefied natural gas imports played a key role in reducing price spikes in New England this winter

During winter 2018–19, deliveries of liquefied natural gas (LNG) at regasification facilities played an important role in moderating natural gas prices in New England. LNG deliveries (or sendout) from the regional regasification facilities generally increased in response to spot natural gas prices at the Algonquin Citygate—a widely referenced trading hub and benchmark for natural gas prices in New England—especially during peak demand periods in January and February.

Historically, spot natural gas prices in New England reflected higher prices and increased price volatility during winter months, when cold weather contributed to rising regional natural gas demand and more congestion on the natural gas pipeline network. During these conditions, LNG becomes a key marginal source of natural gas supply because New England lacks underground storage infrastructure and is not a natural gas-producing region.

In winter 2017–18, spot natural gas prices at Algonquin Citygate increased to $78.98 per million British thermal units (MMBtu) as the weather became extremely cold during the first week of January 2018. During the winter 2018–19, however, the timing of additional incremental natural gas supply provided by LNG imports played an important role in moderating price spikes. Despite periods of similarly cold weather, prices at Algonquin Citygate peaked at $13.56 per million British thermal units (MMBtu) in January and averaged about $7.00/MMBtu in January–February, compared to a 5-year average of $12.70/MMBtu for these months in 2014–18.

In winter of 2018–19, in addition to nine LNG cargoes received by the Everett LNG terminal in Massachusetts from December through February, Northeast Gateway Deepwater Port, located offshore from Boston, also received two cargoes—on January 1 and on January 29, 2019—according to the U.S. Department of Energy LNG imports data. These shipments were the first LNG cargoes received by the facility since February 2016.

Natural gas sendout from the Northeast Gateway contributed about 0.5 Bcf/d of additional natural gas on days of peak demand when prices at the Algonquin Citygate were the highest, effectively moderating daily spot prices. The combined sendout from the Northeast Gateway and Everett terminals averaged 0.7 Bcf/d in mid- and late-January and reached an all-time record of 0.83 Bcf/d on February 1, 2019―0.5 Bcf/d higher than the 0.31 Bcf/d peak sendout for the same period a year earlier, in December 2017–February 2018.

The Canaport LNG import terminal in New Brunswick, Canada, also contributed to meeting peak demand in New England this winter by increasing LNG sendout on the days of the highest spot prices at the Algonquin Citygate. The sendout at the terminal averaged 0.69 Bcf/d on January 20–21 and 0.77 Bcf/d in late-January 2019, compared to 0.59 Bcf/d peak sendout in January 2018.

In the next few years, several pipeline expansion projects under construction in New England, New York, and New Jersey will increase pipeline capacity once completed and likely alleviate some of the existing constraints on the pipeline network in New England. Phase II of the Algonquin Atlantic Bridge project will add 93 MMcf/d of additional pipeline capacity to the Boston-area pipeline system and is due online in the winter of 2020–21.

Overview:

(For the week ending Wednesday, April 17, 2019)

  • Natural gas spot prices fell at most locations this report week (Wednesday, April 10 to Wednesday, April 17). Henry Hub spot prices fell from $2.69 per million British thermal units (MMBtu) last Wednesday to $2.56/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the May 2019 contract decreased 18¢, from $2.700/MMBtu last Wednesday to $2.517/MMBtu yesterday. The price of the 12-month strip averaging May 2019 through April 2020 futures contracts declined 15¢/MMBtu to $2.726/MMBtu.
  • Net injections to working gas totaled 92 billion cubic feet (Bcf) for the week ending April 12. Working natural gas stocks are 1,247 Bcf, which is 4% lower than the year-ago level and 25% lower than the five-year (2014–18) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 21¢/MMBtu, averaging $6.15/MMBtu for the week ending April 17. The price of ethane, propane, butane, isobutane, and natural gasoline all rose, by 7%, 4%, 2%, 2% and 1%, respectively.
  • According to Baker Hughes, for the week ending Tuesday, April 9, the natural gas rig count decreased by 5 to 189. The number of oil-directed rigs rose by 2 to 833. The total rig count decreased by 3, and it now stands at 1,022.

more summary data

Prices/Supply/Demand:

Prices decline across most of the Lower 48 states. This report week (Wednesday, April 10 to Wednesday, April 17), Henry Hub spot prices fell 13¢ from $2.69/MMBtu last Wednesday to a weekly low of $2.56/MMBtu yesterday. Temperatures were warmer than normal east of the Mississippi River and generally colder than normal across the rest of the country. At the Chicago Citygate, prices decreased 22¢ from $2.62/MMBtu last Wednesday to $2.40/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 7¢, down from $3.31/MMBtu last Wednesday to $3.24/MMBtu yesterday. Prices at SoCal Citygate increased 16¢ from $2.74/MMBtu last Wednesday to a weekly high of $2.90/MMBtu yesterday.

Northeast prices fall with warmer–than-normal temperatures. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 32¢ from $2.72/MMBtu last Wednesday to $2.40/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 20¢ from $2.55/MMBtu last Wednesday to $2.35/MMBtu yesterday.

Prices in the Appalachia Basin reached their lowest levels since October 2018. Tennessee Zone 4 Marcellus spot prices decreased 29¢ from $2.39/MMBtu last Wednesday to $2.10/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 21¢ from $2.44/MMBtu last Wednesday to $2.23/MMBtu yesterday.

Prices in the Rocky Mountains down amid pipeline maintenance. Maintenance on the Rockies Express pipeline has sharply reduced eastbound flows of natural gas by 1.5 Bcf/d (from a capacity of 1.8 Bcf/d) into the Midwest, limiting takeaway capacity out of the Rockies supply region. The price at Cheyenne Hub in southeast Wyoming fell 84¢ from $2.35/MMBtu last Wednesday to $1.51/MMBtu yesterday, reaching a low of $0.53/MMBtu on Monday. Prices at Opal Hub in southwest Wyoming fell 60¢ from $2.38/MMBtu last Wednesday to $1.78/MMBtu yesterday.

Permian area prices increase slightly but continue to have large discounts to Henry Hub. Prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, were $0.25/MMBtu last Wednesday, $2.44/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub reached a weekly high of $0.47/MMBtu, $2.09/MMBtu lower than Henry Hub prices.

Supply rises as dry natural gas production grows. According to data from PointLogic Energy, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada increased by 2% from last week.

Demand flat. Total U.S. consumption of natural gas was unchanged from the previous report week, averaging 62.8 Bcf/d according to data from PointLogic Energy. Natural gas consumed for power generation declined by 3% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 2%. Natural gas exports to Mexico have decreased since maintenance on the NET Mexico pipeline in South Texas, which interconnects to the Los Ramones pipeline, began on April 16. According to data from Genscape, exports to Mexico have decreased by an average of 20%, or 1.0 Bcf/d, as a result of this maintenance, which is scheduled to last through April 21.

U.S. liquefied natural gas (LNG) exports increase week over week. Eight LNG vessels (five from Sabine Pass, one from Cove Point, and two from Corpus Christi) with a combined LNG-carrying capacity of 28.4 Bcf departed the United States from April 11 to April 17, according to shipping data compiled by Bloomberg.

On April 12, the Federal Energy Regulatory Commission (FERC) issued a notice to Golden Pass Products, LLC and Golden Pass Pipeline LLC to proceed with initial site preparation for a proposed Golden Pass LNG project. Golden Pass LNG will consist of three trains with a combined liquefaction capacity of 2.1 billion cubic feet per day (Bcf/d). ExxonMobil and Qatar Petroleum are developing the project at the site of an existing Golden Pass regasification terminal. Golden Pass LNG is expected to come online by 2023.

Storage:

Net injections into storage totaled 92 Bcf for the week ending April 12, compared with the five-year (2014–18) average net injections of 21 Bcf and last year's net withdrawals of 34 Bcf during the same week. Working gas stocks totaled 1,247 Bcf, which is 414 Bcf lower than the five-year average and 57 Bcf lower than last year at this time.

According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas stocks ranged from net injections of 82 Bcf to 103 Bcf, with a median estimate of 90 Bcf.

More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
11-Apr
Fri,
12-Apr
Mon,
15-Apr
Tue,
16-Apr
Wed,
17-Apr
Henry Hub
2.69
2.69
2.61
2.60
2.56
New York
2.43
2.33
2.51
2.46
2.35
Chicago
2.59
2.54
2.48
2.50
2.40
Cal. Comp. Avg.*
2.65
2.48
1.89
2.34
2.28
Futures ($/MMBtu)
May contract
2.664
2.660
2.590
2.572
2.517
June contract
2.708
2.704
2.633
2.617
2.559
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Sources: Natural Gas Intelligence and CME Group as compiled by Bloomberg, L.P.
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (4/11/19 - 4/17/19)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
100.0
99.5
90.0
Dry production
89.4
88.9
80.1
Net Canada imports
5.1
5.0
5.8
LNG pipeline deliveries
0.1
0.1
0.1
Total supply
94.5
93.9
85.9

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

U.S. natural gas consumption - Gas Week: (4/11/19 - 4/17/19)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
62.8
62.6
68.2
    Power
22.2
22.8
23.0
    Industrial
20.7
20.4
21.4
    Residential/commercial
19.9
19.5
23.9
Mexico exports
4.5
4.7
4.4
Pipeline fuel use/losses
6.0
6.0
5.7
LNG pipeline receipts
4.8
3.2
3.4
Total demand
78.1
76.5
81.8

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
Tue, April 09, 2019
Change from
 
last week
last year
Oil rigs
833
0.2%
2.2%
Natural gas rigs
189
-2.6%
-1.6%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, April 09, 2019
Change from
 
last week
last year
Vertical
55
1.9%
0.0%
Horizontal
889
-1.3%
0.7%
Directional
78
11.4%
11.4%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2019-04-12
2019-04-05
change
East
228
209
19
Midwest
254
240
14
Mountain
 66
 64
2
Pacific
128
119
9
South Central
571
523
48
Total
1,247
1,155
92
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report
Working gas in underground storage
Historical comparisons
Year ago
(4/12/18)
5-year average
(2014-2018)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
208
9.6
264
-13.6
Midwest
231
10.0
332
-23.5
Mountain
83
-20.5
115
-42.6
Pacific
174
-26.4
211
-39.3
South Central
608
-6.1
739
-22.7
Total
1,304
-4.4
1,661
-24.9
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report


Temperature – heating & cooling degree days (week ending Apr 11)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
157
7
-37
0
0
0
Middle Atlantic
109
-24
-82
0
0
0
E N Central
91
-46
-103
0
0
0
W N Central
94
-37
-114
0
-1
0
South Atlantic
33
-36
-82
29
16
11
E S Central
21
-42
-93
13
8
13
W S Central
9
-22
-42
37
21
29
Mountain
97
-27
-36
7
1
5
Pacific
57
-15
-6
0
-2
0
United States
74
-30
-68
11
6
6
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-day mean ending Apr 11, 2019

Mean Temperature (F) 7-Day Mean ending Apr 11, 2019

Source: National Oceanic and Atmospheric Administration

Deviation between average and normal (°F)

7-day mean ending Apr 11, 2019

Mean Temperature Anomaly (F) 7-Day Mean ending Apr 11, 2019

Source: National Oceanic and Atmospheric Administration