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Natural Gas Weekly Update Archive

for week ending November 13, 2008  |  Release date:  November 14, 2008   |  Previous weeks

Released: November 14, 2008
Next Release: November 20, 2008
Overview (Wednesday, November 5, to Thursday, November 13)

  • Natural gas spot prices decreased at most market locations in the Lower 48 States since last Wednesday (November 5), failing to respond to the increase in heating load that occurred across much of the country, particularly in the Midwest and the Rocky Mountains.
  • Since last Wednesday, the Henry Hub spot price decreased by $0.63 per million Btu (MMBtu) to $6.31 after the intraweek run-up to more than $7 per MMBtu.
  • At the New York Mercantile Exchange (NYMEX), futures prices for the near-month contract decreased in five of the six trading sessions covered by this report, resulting in a weekly net decrease of $0.931 per MMBtu. The December 2008 contract settled yesterday at $6.318 per MMBtu.
  • Natural gas in storage reached 3,467 Bcf as of Friday, November 7, with net injections totaling 62 Bcf. Currently, working gas in storage is 3.5 percent above the 5-year (2003-2007) average, but remains 2 percent below last year’s level.
  • The Minerals Management Service (MMS) reported that as of Wednesday, November 12, 2.1 Bcf per day of Federal offshore production remains shut in.
  • The West Texas Intermediate (WTI) average price decreased $7.13 per barrel since November 5. The WTI settled yesterday at $58.28 per barrel or $10.05 per MMBtu. Crude oil prices continued to slide and as of yesterday the WTI price has decreased by nearly $40 per barrel since the beginning of October.

NYMEX Natural Gas Futures Near-Month Contract Settlement Price, West Texas Intermediate Crude Oil Spot Price, and Henry Hub Natural Gas Spot Price Graph

More Summary Data


Natural gas spot prices decreased at virtually all market locations in the Lower 48 States, with decreases ranging between 14 cents and $1 per MMBtu. The largest losses occurred in the Rockies, where the average regional price dropped 71 cents since last Wednesday. As of yesterday, the average for this region was $4.11 per MMBtu. Spot prices in the Rockies increased during trading through Monday (November 10) as a result of cold weather and snow and the completion of pipeline maintenance projects. However, in Tuesday’s and Wednesday’s trading, prices at most locations in the region recorded losses of up to $1.55 per MMBtu, resulting in sizeable decreases for the report period. Despite cold weather that prevailed for much of the week in the Northeast, prices there also decreased by a similar amount, trading yesterday 69 cents lower than on November 5.

Prices in Louisiana and other regions along the Gulf Coast dropped between 32 and 76 cents per MMBtu since November 5. The Henry Hub spot price decreased 63 cents or about 9 percent per MMBtu, trading yesterday at $6.31. Prices at all other trading locations in Louisiana also decreased by about 9 percent. Prices in South Texas dropped by an average of 48 cents to $5.94 per MMBtu.

The only exceptions to the general pattern of price decreases in the Lower 48 States occurred at a few locations in the East Texas, Midwest, and Alabama/Mississippi regions. In East Texas, the Carthage trading location recorded a 16-cent price increase since last Wednesday, trading yesterday at $5.69 per MMBtu. At the same time, a few points in the Midwest and Alabama/Mississippi regions increased by 4 cents as of yesterday.

Spot Prices

At the NYMEX, the price of the near-month contract (for December delivery) decreased $0.931 per MMBtu since last Wednesday to $6.318. The December contract continued to trade below $7 per MMBtu, where it has stayed for most of its tenure as the near-month (since October 30). Yesterday’s price for the December 2008 contract was the lowest for any December contract settlement price since the December 2003 contract settled at $4.86 per MMBtu on November 25, 2003. Yesterday’s relatively low price for the contract reflects an expectation of ample supplies during the current heating season (November 1-March 31) and lower crude oil prices, which decreased by another 11 percent since last Wednesday. The January 2009 contract price also decreased, albeit much more dramatically since last Wednesday. This contract settled yesterday at $6.477 per MMBtu, more than $1 lower than on November 5.

The average price of the 12-month strip for futures contracts through November 2009 decreased 86 cents per MMBtu to $6.749 since Wednesday, November 5. Lingering economic difficulties causing concerns about demand strength, a robust domestic production outlook (see Other Market Trends), relatively large storage stocks (see Storage section), and the decline in crude oil prices have led to this significant decrease in monthly futures prices. However, the trend in futures prices suggests considerable uncertainty affecting the market. With the exception of a period of relatively stable prices from February 2009 to April 2009, the futures contract prices exhibit an upward trend through February 2010, and this somewhat unusual price pattern in the futures market has continued since at least mid-September.

Wellhead Prices

Annual Energy Review

More Price Data


Working gas in storage increased to 3,467 Bcf as of Friday, November 7, 2008, according to EIA’s Weekly Natural Gas Storage Report (see Storage Figure). This weekly storage level is exceeded only by storage levels of last year, when they were more than 3,500 Bcf. The difference between current and last year’s inventories for the corresponding week is 43 Bcf or 2 percent. Current inventories stand at 3.5 percent above the 5-year average inventory level for the same week.

The implied net injection of 62 Bcf is the highest net injection recorded for any week in November since the beginning of the weekly storage data series (January 1994). This injection exceeds the 61-Bcf injection recorded for the week ended November 4, 2005. This report week’s implied net injection is significantly higher than both the 5-year average injection of 23 Bcf and last year’s injection of 4 Bcf. The significantly higher-than-average injection occurred amid warmer-than-normal weather and associated lower demand. Additionally, use of natural gas for electric power generation also likely decreased since overall electric output decreased by 4 percent in the Lower 48 States.

The temperatures in the Lower 48 States during the storage report week were moderate for this time of year, as all nine Census Divisions recorded above-average temperatures. For the week ended November 6, heating degree-days (HDD) were about 33 percent lower than both normal and last year for the country as a whole (see Temperature Maps and Data). On a Census Division level, temperatures for the week were between 1 and 56 percent above normal. The New England, Middle Atlantic, and East North Central Census Divisions recorded temperatures that were in part significantly warmer than normal, contributing to the relatively large injection in the East Region of 31 Bcf, which sharply differs from the historical average injection of 9 Bcf for the same week.

Storage Table

More Storage Data

Other Market Trends

EIA Releases the November Short-Term Energy Outlook. The Energy Information Administration (EIA) on November 12 released its latest Short-Term Energy Outlook, which includes highlights about the U.S. and global economic downturn, residential natural gas prices for this heating season, and the Henry Hub spot price. The current U.S. and global economic downturn has led to a decrease in global energy demand. As a result, the price of natural gas is expected to remain lower this heating season. The spot price of natural gas at the Henry Hub is expected to average $9.27 per thousand cubic feet (Mcf) in 2008 and then is expected to decrease to reach about $6.82 in 2009. During October 2008 through March 2009, residential natural gas prices are expected to reach $13.02 per Mcf, which is 2 percent more than last year’s level during the same months. Total natural gas consumption is expected to increase by 1.1 percent in 2008 and then fall by 0.2 percent in 2009. Growth in all end-use demand sectors except electric power, which is expected to decline by 2.3 percent, is projected to remain high through the rest of 2008. This trend is expected to change next year. Residential and commercial sectors are expected to exhibit very slight growth in 2009. The contracting economy is expected to result in a 2.2 percent decline in the industrial consumption sector and less then 1 percent electric power sector. Marketed natural gas production is projected to increase by 6 percent in 2008, because of the strong production growth from the unconventional fields in Texas, Wyoming, and Oklahoma. Though onshore production growth is expected to continue to grow in 2009, lower average prices and poor economic conditions are expected to limit the expansion of supplies to 1.9 percent. U.S. imports of liquefied natural gas (LNG) have declined from last year, because of lower relative U.S. natural gas prices resulting from the strength of global LNG demand and LNG supply. LNG imports are expected to decline year-over-year by more than 55 percent in 2008, reaching about 350 Bcf and then increasing to about 410 Bcf in 2009.

USGS Estimates More Than 85 Tcf of Gas Hydrates on Alaska’s North Slope. A new U.S. Geological Survey (USGS) assessment estimates that there are 85.4 trillion cubic feet (Tcf) of undiscovered, technically recoverable gas from natural gas hydrates on the Alaskan North Slope. The USGS assessment is the first-ever resource estimate of technically recoverable natural gas hydrates, which are naturally occurring, ice-like solids in which water molecules trap natural gas molecules in a cage-like structure known as a clathrate. Technically recoverable means the resource can be discovered, developed, and produced using current technology and industry practices. However, further research, including long-term production tests, still is needed to demonstrate gas hydrates as an economically producible resource. Among the various techniques for production of natural gas from gas hydrates, depressurization appears to be the most promising method. This involves changing the pressure of the hydrate accumulation, which changes the resource from a solid state into components of gas and water that can be lifted to the surface. Depressurization was the only production technique assessed in this estimate. The area assessed in northern Alaska extends from the National Petroleum Reserve in Alaska on the west through the Arctic National Wildlife Refuge on the east and from the Brooks Range northward to the State-Federal offshore boundary (located 3 miles north of the coastline). Of the estimated 85.4 Tcf of gas within hydrates on the North Slope, 56 percent occurs on federally managed lands, 39 percent on lands and offshore waters managed by the State of Alaska, and 4 percent on Native Alaskan lands. Conventional undiscovered, technically recoverable gas resources on the North Slope of Alaska are estimated at 119.15 Tcf.

MMS Asks for Public Comment on Oil and Gas Leasing Process for Proposed Sale Offshore Virginia. The Minerals Management Service (MMS) as begun the initial steps in the multi-year leasing process to hold a sale for acreage located offshore Virginia. MMS published a Federal Register notice asking for public comment within 45 days beginning on November 13. The notice, titled Call for Information and Interest/Nominations and Notice of Intent (Call/NOI) to Prepare an Environmental Impact Statement (EIS), asks for comments on the proposed information collection, which will be useful for planning and analysis and in determining whether to go forward with a Virginia lease sale. The area offshore Virginia was included as a result of the Commonwealth’s current energy policy as well as continued interest in knowing what resources may be off the Virginia coastline. Lease sales off the Mid-Atlantic coast have not been held since 1983. The area offshore Virginia was initially included in the Outer Continental Shelf Oil and Gas Leasing Program: 2007-2012 but leasing was prohibited by an Executive order and a Congressional moratorium. In July 2008, President Bush lifted the withdrawal and the Congressional moratoria expired on September 30, 2008. Both of these actions allowed the option of the special interest lease sale. The final decision will be made at a later date only if the sale is in compliance with applicable laws including all requirements of the Outer Continental Shelf Lands Act and the National Environmental Policy Act.

Natural Gas Transportation Update

  • Algonquin Gas Transmission Company has experienced an unplanned outage at its Burrillville Compressor Station in Rhode Island. Although the outage, which is expected to be in effect through November 20, has not resulted in any interruption of service, the pipeline company said that it may have to reduce flows depending on scheduled levels. The company offered several alternate flow paths to avoid a bottleneck at the compressor unit. Shippers can source supplies, for example, at the Beverly, Massachusetts, interconnection with Maritimes and Northeast Pipeline Company and the Everett, Massachusetts, receipt point from Distrigas of Massachusetts, LLC.
  • Colorado Interstate Gas Company (CIG) on November 11 ended an operational alert that had required shippers to balance their flows or face penalties. The alert, which had been in effect since early October, had been implemented because of high load factors and limited storage injection capacity. When colder weather moved into the Rockies region and storage withdrawals occurred, the pipeline regained operational flexibility.
  • Since November 13, Questar Pipeline Company has not been accepting nominations to make up for prior imbalances on its pipeline. Additionally, the company said nominations and actual volumes delivered must align. The pipeline said that its Clay Basin storage facility in Daggett County, Utah, is now 95 percent full and flexibility is limited. Injections into the Clay Basin will be restricted, the pipeline company said.
  • Questar said it would be performing maintenance on a compressor unit at Clay Basin storage facility beginning Friday, November 14. During the outage, injection capacity is reduced to 230 million cubic feet (MMcf) per day from the usual capacity of 255 MMcf per day.

See Weekly Natural Gas Storage Report for additional Natural Gas Storage Data.
See Natural Gas Analysis for additional Natural Gas Reports and Articles.
See Short-Term Energy Outlook for additional Natural Gas Prices, Supply, and Demand.