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Natural Gas Weekly Update

for week ending February 12, 2020   |  Release date:  February 13, 2020   |  Next release:  February 20, 2020   |   Previous weeks


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

In the News:

North Dakota provides regulatory guidance to reduce natural gas flaring

Natural gas production in North Dakota reached 3.1 billion cubic feet per day (Bcf/d) in November 2019, a more than ten-fold increase compared with January 2010 levels. In the first 11 months of 2019, North Dakota flared about 20% of its natural gas production, or 0.56 Bcf/d, which is 40% higher than in 2018. Increases in natural gas production are primarily related to associated gas produced from oil wells in the Bakken formation. Flaring refers to combusting natural gas in the atmosphere instead of capturing and processing natural gas in a processing plant.

North Dakota implemented natural gas capture goals in 2014 to limit the amount of natural gas flared into the atmosphere. Natural gas processing capacity has increased alongside crude oil production but has lagged behind the growth in associated natural gas production. The state natural gas capture target—currently at 88% and set to increase to 91% in November 2020—has not been met in every month since March 2018. In the most recent data month, November 2019, only 83% of natural gas produced in North Dakota was captured.

Insufficient natural gas processing capacity has placed constraints on crude oil production, and oil producers are looking for ways to comply with natural gas capture targets. According to the North Dakota Pipeline Authority, natural gas processing plant capacity additions in 2019 increased total capacity by 0.71 Bcf/d to reach 3.1 Bcf/d. They expect an additional 0.9 Bcf/d of natural gas processing to enter service during 2020 and 2021. These additions will support crude oil production growth, but the new capacity may fill up faster than anticipated.

On November 15, 2019, the North Dakota Industrial Commission (NDIC), the regulatory entity that oversees the state’s flaring reduction rules, held a hearing to consider both how to raise natural gas capture levels using alternative natural gas capture strategies and how to provide regulatory clarity in natural gas gathering agreements. According to the North Dakota Pipeline Authority, about three-fourths of flaring is associated with oil wells connected to natural gas gathering pipelines.

As a result of the hearing, the NDIC issued an order to encourage firm service contractual agreements along natural gas gathering pipelines. In North Dakota, most contractual agreements between natural gas producers and purchasers are for interruptible service, which means a producer may be denied the ability to transport natural gas in a gathering system. Firm service contracts provide a greater level of certainty to producers because service along the gathering line is guaranteed and may reduce the amount of well shut-ins and flared natural gas.

A low natural gas price environment relative to crude oil poses a challenge to the buildout of natural gas gathering pipelines and natural gas processing facilities. However, according to NDIC, firm service contracts may encourage a faster buildout of gathering line infrastructure because investments with guaranteed commitments provide economic certainty for project developers.

Overview:

(For the week ending Wednesday, February 12, 2019)

  • Natural gas spot prices rose at most locations this report week (Wednesday, February 5 to Wednesday, February 12). The Henry Hub spot price rose from $1.85 per million British thermal units (MMBtu) last Wednesday to $1.87/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the March 2020 contract decreased 2¢, from $1.861/MMBtu last Wednesday to $1.844/MMBtu yesterday. The price of the 12-month strip averaging March 2020 through February 2021 futures contracts rose 2¢/MMBtu to $2.172/MMBtu.
  • The net withdrawal from working gas totaled 115 billion cubic feet (Bcf) for the week ending February 7. Working natural gas stocks total 2,494 Bcf, which is 32% more than the year-ago level and 9% more than the five-year (2015–19) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 27¢/MMBtu, averaging $4.33/MMBtu for the week ending February 12. The prices of natural gasoline, propane, butane, and isobutane fell by 2%, 3%, 15%, and 19%, respectively. Isobutane prices have experienced larger-than-normal price movements over the past month as Enterprise’s isobutane dehydrogenation plant entered service and ramped up to full operating capacity. The price of ethane rose by 3%.
  • According to Baker Hughes, for the week ending Tuesday, February 4, the natural gas rig count decreased by 1 to 111. The number of oil-directed rigs rose by 1 to 676. The total rig count stayed at 790.

more summary data

Prices/Supply/Demand:

Prices rise at most locations. This report week (Wednesday, February 5 to Wednesday, February 12), the Henry Hub spot price traded within a narrow range and rose 2¢ from $1.85/MMBtu last Wednesday to $1.87/MMBtu yesterday. Temperatures across the Lower 48 states were generally warmer than normal, especially on the East Coast, with colder-than-normal temperatures across the Rocky Mountains. At the Chicago Citygate, the price increased 9¢ from $1.74/MMBtu last Wednesday to $1.83/MMBtu yesterday.

California prices fall. The price at SoCal Citygate in Southern California decreased 40¢ from $2.74/MMBtu last Wednesday to $2.34/MMBtu yesterday with low net withdrawals from storage. The price at PG&E Citygate in Northern California traded within a narrow range and fell 1¢, down from $2.68/MMBtu last Wednesday to $2.67/MMBtu yesterday.

Northeast prices rise amid forecasts of cold weather. At the Algonquin Citygate, which serves Boston-area consumers, the price went up 52¢ from $1.98/MMBtu last Wednesday to $2.50/MMBtu yesterday. Prices increased 54¢ between Tuesday and Wednesday in anticipation of colder-than-normal weather over the coming weekend. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 9¢, from a low of $1.73/MMBtu last Wednesday to $1.82/MMBtu yesterday.

The Tennessee Zone 4 Marcellus spot price increased 8¢ from $1.51/MMBtu last Wednesday to $1.59/MMBtu yesterday. The price at Dominion South in southwest Pennsylvania rose 9¢ from $1.53/MMBtu last Wednesday to $1.62/MMBtu yesterday.

Permian Basin prices fall after cold weather in Texas recedes. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged a high of $1.54/MMBtu last Wednesday amid freezing temperatures in the region, 31¢/MMBtu lower than the Henry Hub price. Yesterday, the price at the Waha Hub averaged $0.80/MMBtu, $1.07/MMBtu lower than the Henry Hub price.

Supply is flat. According to data from IHS Markit, the average total supply of natural gas remained the same as in the previous report week, averaging 99.8 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 2% from last week.

Demand rises. Total U.S. consumption of natural gas rose by 5% compared with the previous report week, according to data from IHS Markit. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption increased by 2% week over week. In the residential and commercial sectors, consumption increased by 7%. Natural gas exports to Mexico decreased 3%.

U.S. LNG exports decrease week over week. Fifteen liquefied natural gas (LNG) vessels (five from Sabine Pass, three each from Corpus Christi and Freeport, and two each from Cameron and Cove Point) with a combined LNG-carrying capacity of 55 billion cubic feet (Bcf) departed the United States between February 6 and February 12, 2020, according to shipping data compiled by Bloomberg.

Storage:

The net withdrawal from storage totaled 115 Bcf for the week ending February 7, compared with the five-year (2015–19) average net withdrawal of 131 Bcf and last year's net withdrawal of 101 Bcf during the same week. Working natural gas stocks totaled 2,494 Bcf, which is 215 Bcf more than the five-year average and 601 Bcf more than last year at this time.

According to a Bloomberg survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from a net withdrawal of 102 Bcf to 116 Bcf, with a median estimate of 110 Bcf.

The average rate of withdrawal from storage is 13% lower than the five-year average so far in the withdrawal season (November through March). If the rate of withdrawal from storage matched the five-year average of 11 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,912 Bcf on March 31, which is 215 Bcf higher than the five-year average of 1,697 Bcf for that time of year.

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 ($/MMBtu)
Thu,
06-Feb
Fri,
07-Feb
Mon,
10-Feb
Tue,
11-Feb
Wed,
12-Feb
Henry Hub
1.87
1.89
1.81
1.81
1.87
New York
1.86
1.84
1.76
1.82
1.82
Chicago
1.74
1.76
1.71
1.72
1.83
Cal. Comp. Avg.*
2.13
2.06
2.07
2.09
2.12
Futures ($/MMBtu)
March contract
1.862
1.858
1.766
1.788
1.844
April contract
1.887
1.892
1.804
1.823
1.874
*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: (2/6/20 - 2/12/20)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
106.9
106.7
98.9
Dry production
94.5
94.3
88.0
Net Canada imports
5.1
5.0
4.5
LNG pipeline deliveries
0.1
0.3
0.3
Total supply
99.8
99.6
92.7

Source: IHS Markit
Note: LNG pipeline deliveries represent natural gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (2/6/20 - 2/12/20)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
96.4
92.1
99.7
    Power
29.1
27.9
28.4
    Industrial
24.3
23.9
25.1
    Residential/commercial
43.0
40.3
46.2
Mexico exports
5.3
5.4
4.8
Pipeline fuel use/losses
7.4
7.3
7.2
LNG pipeline receipts
8.6
9.3
3.2
Total demand
117.7
114.2
114.9

Source: IHS Markit
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, February 04, 2020
Change from
 
last week
last year
Oil rigs
676
0.1%
-20.8%
Natural gas rigs
111
-0.9%
-43.1%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, February 04, 2020
Change from
 
last week
last year
Vertical
33
-2.9%
-51.5%
Horizontal
711
0.0%
-23.0%
Directional
46
2.2%
-20.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2020-02-07
2020-01-31
change
East
569
598
-29
Midwest
694
725
-31
Mountain
 126
 136
-10
Pacific
202
210
-8
South Central
903
941
-38
Total
2,494
2,609
-115
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report
Working gas in underground storage
Historical comparisons
Year ago
(2/7/19)
5-year average
(2015-2019)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
447
27.3
498
14.3
Midwest
496
39.9
587
18.2
Mountain
96
31.3
131
-3.8
Pacific
157
28.7
222
-9.0
South Central
695
29.9
841
7.4
Total
1,893
31.7
2,279
9.4
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report


Temperature – heating & cooling degree days (week ending Feb 06)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
214
-58
-55
0
0
0
Middle Atlantic
190
-70
-71
0
0
0
E N Central
212
-75
-59
0
0
0
W N Central
237
-61
-62
0
0
0
South Atlantic
107
-68
-44
7
0
-1
E S Central
104
-72
-7
0
0
-1
W S Central
101
-25
46
3
-1
-12
Mountain
226
8
39
0
-1
0
Pacific
115
5
-18
0
0
0
United States
169
-47
-32
2
0
-2
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-day mean ending Feb 06, 2020

Mean Temperature (F) 7-Day Mean ending Feb 06, 2020

Source: National Oceanic and Atmospheric Administration

Deviation between average and normal (°F)

7-day mean ending Feb 06, 2020

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 06, 2020

Source: National Oceanic and Atmospheric Administration