In the News:
Pennsylvania's natural gas production has risen steadily in 2012 despite a significant reduction in the number of new natural gas wells being drilled by operators.
The August 23 Natural Gas Weekly Update examined the slowing pace of natural gas drilling in Pennsylvania, noting that the number of new natural gas wells started per day in 2012 has declined sharply in recent months. The state's natural gas production, however, continues to increase despite the reduction in new well starts. According to BENTEK Energy LLC (Bentek), Pennsylvania's natural gas production has increased every month in 2012, rising from an average of about 4.4 billion cubic feet (Bcf) per day in January to approximately 5.9 Bcf per day in August. As with production increases in recent years, the rising 2012 volumes are associated predominantly with horizontal drilling programs in sections of the Marcellus and other shale formations.
The state's increasing natural gas production in 2012 is largely a function of a robust inventory of producing wells, particularly the relatively highly-productive horizontal wells drilled and completed during the past three to four years. The drainage area of wells and therefore their productive potential increases significantly by switching drilling orientation from vertical to horizontal, and expands even further with longer horizontal laterals. Underscoring the likelihood of continued natural gas production increases in Pennsylvania is the state's large backlog of already drilled but not yet producing natural gas wells, as well as the impending completion of pipeline projects necessary to market the natural gas.
Overview:
(For the Week Ending Wednesday, September 12, 2012)
- Natural gas prices increased for the report week (Wednesday to Wednesday) at many of the country's trading locations, with an exception at Transco Zone 6-NY, which registered a decrease of 3 cents. The Henry Hub price closed at $2.96 per million British thermal units (MMBtu), up 9 cents for the week.
- The natural gas futures market trended steadily higher over the week. At the New York Mercantile Exchange (NYMEX), the October 2012 natural gas contract gained nearly 27 cents per MMBtu to close at $3.063 per MMBtu yesterday.
- Working natural gas in storage rose last week to 3,429 billion cubic feet (Bcf) as of Friday, September 7, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 27 Bcf for the week positioned storage volumes 342 Bcf above year-ago levels.
- The natural gas rotary rig count, as reported by Baker Hughes Incorporated on September 7, declined by 21 to 452 active units. Meanwhile, oil-directed rigs declined by 10 to 1,409 units.
Prices:
Natural gas prices increased over the report week at most spot market locations. For example, at the Sumas, Henry Hub, SoCal, Chicago, and Algonquin Citigate trading points, spot prices increased between 9 cents and 16 cents for the week. The largest price increase occurred at the Algonquin Citygate trading point (serving Boston), which increased by 16 cents (4.5 percent) from $3.55 per MMBtu last Wednesday to $3.71 per MMBtu yesterday.
The NYMEX October 2012 futures contract rose by 9.6 percent from $2.795 per MMBtu last Wednesday to $3.063 per MMBtu yesterday. The 12-Month Strip (average of October 2012 to September 2013 contracts) increased by 6.7 percent over the same period, from $3.290 per MMBtu last Wednesday to $3.510 per MMBtu yesterday.
Total consumption for the report week registered an overall decrease, driven by a significant decrease in the power sector. According to estimates from Bentek, domestic natural gas consumption declined by 5.0 percent from last week, driven by decreases of 14.6 percent in the power sector due to cooler weather. Consumption in the industrial and residential/ commercial sectors increased by 1.6 percent and 17.6 percent, respectively.
Total supply for the week increased by 2.3 percent, driven by an increase in domestic production. According to Bentek estimates, domestic weekly dry gas production was 3.1 percent higher than the previous week and 2.2 percent above the same time last year. Imports from Canada decreased by 6.4 percent to 5.3 Bcf. Liquefied natural gas (LNG) sendout dropped sharply, down 11.1 percent from last week to 0.2 Bcf; sendout volumes remain well below (47.8 percent) year-ago levels.
Storage
Working natural gas in storage increased to 3,429 Bcf as of Friday, September 7, according to EIA's WNGSR. This represents an implied net injection of 27 Bcf from the previous week. This week's injection was 45 Bcf below the 5-year (2007-2011) average injection of 72 Bcf, and 53 Bcf below last year's injection of 80 Bcf. Inventories are currently 342 Bcf (11.1 percent) greater than last year at this time and 284 Bcf (9.0 percent) greater than the 5-year average.
Two of the three storage regions posted increases this week. Inventories in the East and West regions increased by 38 Bcf (the 5-year average net injection is 51 Bcf) and 2 Bcf (the 5-year average net injection is 6 Bcf), respectively. The Producing region posted a decrease of 13 Bcf (the 5-year average net injection is 14 Bcf). In the Producing Region, working natural gas inventories decreased 14 Bcf (6.3 percent) in salt cavern facilities and remained at the previous week's level in nonsalt cavern facilities.
Temperatures during the storage report week were 5.1 degrees warmer than the 30-year normal temperature and 4.0 degrees warmer than the same period last year. Temperatures in the lower 48 States averaged 76.1 degrees, compared to 72.1 last year and the 30-year normal of 71.0 degrees. During the week all regions were warmer than normal, particularly the East North Central and West North Central Census divisions in the Midwest, which, respectively, averaged 7.7 and 7.1 degrees warmer than the 30-year normal.
See also:
| Spot Prices ($/MMBtu) | Thu, 06-Sep |
Fri, 07-Sep |
Mon, 10-Sep |
Tue, 11-Sep |
Wed, 12-Sep |
|---|---|---|---|---|---|
| Henry Hub | 2.85 |
2.73 |
2.66 |
2.82 |
2.96 |
| New York | 3.10 |
2.80 |
2.80 |
3.00 |
3.10 |
| Chicago | 2.94 |
2.78 |
2.76 |
2.96 |
3.10 |
| Cal. Comp. Avg,* | 3.01 |
2.87 |
2.87 |
3.09 |
3.20 |
| Futures ($/MMBtu) | |||||
| October Contract | 2.776 |
2.682 |
2.812 |
2.992 |
3.063 |
| November Contract | 2.910 |
2.833 |
2.941 |
3.104 |
3.191 |
| *Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg. | |||||
| Source: NGI's Daily Gas Price Index | |||||
| U.S. Natural Gas Supply - Gas Week: (9/5/12 - 9/12/12) | ||
|---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
| Gross Production | 2.20%
|
3.12%
|
| Dry Production | 2.21%
|
3.13%
|
| Canadian Imports | 7.70%
|
-6.40%
|
| West (Net) | 32.35%
|
3.09%
|
| MidWest (Net) | -14.43%
|
-15.84%
|
| Northeast (Net) | 2.92%
|
-12.32%
|
| LNG Imports | -47.84%
|
-11.08%
|
| Total Supply | 2.33%
|
2.27%
|
| Source: BENTEK Energy LLC | ||
| U.S. Consumption - Gas Week: (9/5/12 - 9/12/12) | ||
|---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
| U.S. Consumption | 12.30%
|
-5.01%
|
| Power | 26.68%
|
-14.61%
|
| Industrial | 1.78%
|
1.64%
|
| Residential/Commercial | -1.05%
|
17.63%
|
| Total Demand | 13.43%
|
-4.93%
|
| Source: BENTEK Energy LLC | ||
| Rigs | |||
|---|---|---|---|
Fri, September 07, 2012 |
Change from |
||
last week |
last year |
||
| Oil Rigs | 1,409 |
-0.70% |
33.30% |
| Natural Gas Rigs | 452 |
-4.44% |
-49.33% |
| Miscellaneous | 3 |
50.00% |
-66.67% |
| Rig Numbers by Type | |||
|---|---|---|---|
Fri, September 07, 2012 |
Change from |
||
last week |
last year |
||
| Vertical | 515 |
-2.09% |
-12.56% |
| Horizontal | 1,135 |
-1.22% |
0.09% |
| Directional | 214 |
-2.28% |
-8.94% |
| Source: Baker Hughes Inc. | |||
| Working Gas in Underground Storage | ||||
|---|---|---|---|---|
Stocks billion cubic feet (bcf) |
||||
| Region | 9/7/12
|
8/31/12
|
change |
|
| East | 1,831 |
1,793 |
38
|
|
| West | 494 |
492 |
2
|
|
| Producing | 1,104 |
1,117 |
-13
|
|
| Total | 3,429 |
3,402 |
27
|
|
| Source: U.S. Energy Information Administration | ||||
| Working Gas in Underground Storage | |||||
|---|---|---|---|---|---|
Historical Comparisons |
|||||
Year ago (9/7/11) |
5-year average (2007-2011) |
||||
| Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
| East | 1,678 |
9.1 |
1,751 |
4.6 |
|
| West | 434 |
13.8 |
437 |
13.0 |
|
| Producing | 975 |
13.2 |
957 |
15.4 |
|
| Total | 3,087 |
11.1 |
3,145 |
9.0 |
|
| Source: U.S. Energy Information Administration | |||||
| Temperature -- Heating & Cooling Degree Days (week ending Sep 06) | ||||||||
|---|---|---|---|---|---|---|---|---|
HDD deviation from: |
CDD deviation from: |
|||||||
| Region | HDD Current |
normal |
last year |
CDD Current |
normal |
last year |
||
| New England | 2
|
-10
|
-7
|
29
|
15
|
6
|
||
| Middle Atlantic | 0
|
-7
|
-6
|
60
|
34
|
27
|
||
| E N Central | 0
|
-11
|
-20
|
69
|
43
|
21
|
||
| W N Central | 2
|
-15
|
-21
|
70
|
35
|
27
|
||
| South Atlantic | 0
|
-1
|
-2
|
103
|
28
|
22
|
||
| E S Central | 0
|
-1
|
-8
|
102
|
34
|
30
|
||
| W S Central | 0
|
-1
|
-2
|
143
|
41
|
40
|
||
| Mountain | 3
|
-18
|
-11
|
69
|
16
|
2
|
||
| Pacific | 3
|
-4
|
1
|
48
|
11
|
-7
|
||
| United States | 1
|
-7
|
-9
|
79
|
29
|
19
|
||
|
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration | ||||||||
Average temperature (°F)
7-Day Mean ending Sep 06, 2012
Source: NOAA/National Weather Service
Deviation between average and normal (°F)
7-Day Mean ending Sep 06, 2012
Source: NOAA/National Weather Service
