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Natural Gas Weekly Update

for week ending April 3, 2013   |  Release date:  April 4, 2013   |  Next release:  April 11, 2013   |   Previous weeks

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

In the News:

Marketed natural gas production in the Gulf of Mexico federal offshore region falls to 6% of national total in 2012

Continuing a long-term trend of decline, the contribution of marketed production of natural gas from the Gulf of Mexico federal offshore region accounted for 6.0 percent of total U.S. marketed natural gas production (4.2 billion cubic feet per day (Bcf/d)) in 2012, according to data published in Energy Information Administration's (EIA) Natural Gas Monthly. In contrast, in the period from 1997 to 2007, marketed production from these same waters provided, on average, over 20 percent (11.7 Bcf/d), of U.S. marketed production.

Among the contributing factors to this decline:

  • Increasing amounts of domestic, on-shore production, primarily from shale gas and tight oil formations. In 2012, nearly 40 percent (over 26 Bcf/d according to Lippman Consulting, Inc.) of U.S. dry natural gas production came from production in shale plays, increasing over 20-fold from 2000 levels. In 2012, the two most productive shale plays were the Haynesville play in Louisiana and Texas, and the Marcellus play in Pennsylvania. In the Marcellus play, despite reduced drilling activity, production increased by almost 70 percent in 2012 over year-ago levels. Increased drilling in tight oil plays like the Eagle Ford play in Texas has contributed to increased associated natural gas production.
  • Relatively low natural gas prices. Low natural gas prices in recent years have diminished the economic incentive for off-shore natural gas-directed drilling. However, relatively high crude oil prices continue to support oil-directed drilling and the production of associated gas, particularly in deep waters. New large deepwater projects directed toward liquids development are projected to reverse the decline in natural gas production from the Gulf of Mexico in 2015, according EIA's Annual Energy Outlook 2013 Early Release.

Overview:

(For the Week Ending Wednesday, April 3, 2013)

  • Both spot and futures prices posted modest declines this report week (Wednesday, March 27 – Wednesday, April 3). The Henry Hub spot price decreased from $4.08 per million British thermal units (MMBtu) last Wednesday to $4.00 per MMBtu yesterday. Most price points across the country also experienced modest declines.
  • The May 2013 New York Mercantile Exchange (Nymex) contract also declined, from $4.068 per MMBtu last Wednesday to close at $3.900 per MMBtu yesterday.
  • Working natural gas in storage declined to 1,687 Bcf as of Friday, March 29, according to EIA's Weekly Natural Gas Storage Report (WNGSR). An implied storage withdrawal of 94 Bcf for the week moved storage levels 779 Bcf below year-ago levels, and 37 Bcf below the 5-year average.
  • Natural gas rotary rigs totaled 389 as of Friday, March 28, according to data released by Baker Hughes Incorporated. This represents a decline of 29 rigs from the previous week and is the first time it has fallen below 400 since 1999. Oil rigs rose by 30 to 1,354.

more summary data

Prices:

Natural gas prices declined across most of the country. The Henry Hub spot price decreased from $4.08 per MMBtu last Wednesday to $4.00 per MMBtu yesterday, reversing its general increasing trend of the prior 6 weeks. Outside the Northeast, spot prices almost universally fell week-over-week, but declines were moderate.

Prices in the Northeast largely increased week-over-week as the region experienced unseasonably cold weather toward the end of the report week. Temperatures in the Northeast were significantly colder than usual beginning Tuesday with spot prices on Monday increasing more than $2.00 per MMBtu in New England and New York before moderating to close the report week. The spot price at the Algonquin Citygate, which serves Boston consumers, gained $2.31 per MMBtu on Monday, but by Wednesday prices had moderated to $5.30 per MMBtu, just $0.60 higher than last Wednesday's price of $4.70 per MMBtu. Similarly, at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, prices gained $2.40 per MMBtu on Monday, but by Wednesday prices had moderated to $5.10 per MMBtu, just $0.86 higher than last Wednesday's price of $4.24 per MMBtu.

Natural gas supply remained mostly flat over the week, with increases in production offsetting declines in Canadian imports. Dry production increased by 1.0 percent from the previous week and is up 2.2 percent over its year-ago levels, according to BENTEK Energy Services LLC (Bentek) data. Canadian imports declined 5.7 percent over the previous week. Domestic consumption decreased 16.3 percent over the previous week, with declines in all of the consuming sectors. Use of natural gas for power generation declined 11.3 percent, with large declines in the Southeast. Residential and commercial consumption averaged 25.0 percent lower than last week but was still 39.0 percent higher than a year ago. The eastern half of the country was somewhat cooler than normal this week, whereas, last year at this time, most of the country was significantly warmer than normal.

The Nymex futures price declined week-on-week. The near-month Nymex price declined by 17 cents per MMBtu over the report period, from $4.068 per MMBtu last Wednesday to $3.900 per MMBtu yesterday. The 12-Month Strip (the average of May 2013 to April 2014 contracts) similarly declined over the report period, decreasing by 13 cents per MMBtu and ending the week at $4.106 per MMBtu.

more price data

Storage

Working natural gas in storage decreased to 1,687 Bcf as of Friday, March 29, according to EIA's WNGSR. This represents an implied net withdrawal of 94 Bcf from the previous week, and is the largest net withdrawal for this time of year since the start of EIA's weekly storage data collection in 2002. Both the 5-year average and year-ago stock changes for the week were implied net injections of 4 Bcf and 43 Bcf, respectively. Inventories are currently 779 Bcf (31.6 percent) less than last year at this time and 37 Bcf (2.1 percent) below the 5-year average of 1,724 Bcf – the first time since September 2011 that stocks were below the 5-year average.

All three storage regions posted declines this week. Inventories in the East, West, and Producing regions decreased by 48 Bcf (the 5-year average net withdrawal is 13 Bcf), 4 Bcf (compared with the 5-year average net injection of 2 Bcf), and 42 Bcf (compared with the 5-year average net injection of 17 Bcf), respectively. In the Producing region, working natural gas inventories decreased 12 Bcf (6.7 percent) in salt cavern facilities and decreased 29 Bcf (5.5 percent) in nonsalt cavern facilities.

Temperatures during the storage report week were 6.0 degrees cooler than the 30-year normal temperature and 15.7 degrees cooler than the same period last year. Temperatures in the Lower 48 states averaged 41.3 degrees, compared to 57.0 degrees last year and the 30-year normal of 47.3 degrees. While overall temperatures were relatively cooler than normal, temperatures varied somewhat across Census divisions. The East South Central Census division in the South and the West North Central Census division in the Midwest were particularly cool, averaging 11.4 and 10.7 degrees cooler, respectively, than the 30-year normal. In the West, the Pacific Census division was relatively warm, averaging 2.1 degrees warmer than the 30-year normal. Heating degree-days nationwide were 30.2 percent above normal and 158.5 percent above last year.

more storage data

See also:



Natural Gas Spot Prices
Spot Prices ($/MMBtu)
Thu,
28-Mar
Fri,
29-Mar
Mon,
1-Apr
Tue,
2-Apr
Wed,
3-Apr
Henry Hub
4.03
Closed
3.97
4.07
4.00
New York
4.44
Closed
6.84
7.05
5.10
Chicago
4.34
Closed
4.28
4.31
4.10
Cal. Comp. Avg,*
4.05
Closed
3.95
4.02
3.88
Futures ($/MMBtu)
May Contract
4.024
Closed
4.015
3.969
3.900
June Contract
4.066
Closed
4.061
4.019
3.950
*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


U.S. Natural Gas Supply - Gas Week: (3/27/13 - 4/3/13)
Percent change for week compared with:
 
last year
last week
Gross Production
2.24%
0.99%
Dry Production
2.21%
0.98%
Canadian Imports
-4.02%
-5.65%
      West (Net)
-3.76%
-9.60%
      MidWest (Net)
2.62%
22.03%
      Northeast (Net)
-22.07%
-40.33%
LNG Imports
-72.25%
-59.30%
Total Supply
1.41%
0.30%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (3/27/13 - 4/3/13)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
5.10%
-16.32%
Power
-24.98%
-11.27%
Industrial
4.10%
-4.53%
Residential/Commercial
38.97%
-24.99%
Total Demand
5.54%
-16.15%
Source: BENTEK Energy LLC
Natural Gas Supply


Rigs
Fri, March 29, 2013
Change from
 
last week
last year
Oil Rigs
1,354
2.27%
2.73%
Natural Gas Rigs
389
-6.94%
-40.88%
Miscellaneous
5
25.00%
66.67%
Rig Numbers by Type
Fri, March 29, 2013
Change from
 
last week
last year
Vertical
443
2.55%
-21.73%
Horizontal
1,099
-0.09%
-6.86%
Directional
206
-3.74%
-11.59%
Source: Baker Hughes Inc.


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
3/29/13
3/22/13
change
East
662
710
-48
West
330
334
-4
Producing
695
737
-42
Total
1,687
1,781
-94
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(3/29/12)
5-year average
(2008-2012)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
1,082
-38.8
738
-10.3
West
348
-5.2
263
25.5
Producing
1,035
-32.9
724
-4.0
Total
2,466
-31.6
1,724
-2.1
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending Mar 28)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
196
15
100
0
0
0
Middle Atlantic
199
34
117
0
0
0
E N Central
223
51
164
0
0
-8
W N Central
244
74
181
0
-1
-1
South Atlantic
162
69
131
7
-5
-18
E S Central
161
75
138
0
-5
-11
W S Central
98
49
73
5
-8
-16
Mountain
172
27
75
3
0
0
Pacific
67
-16
-30
0
-1
0
United States
168
39
103
2
-3
-7
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Mar 28, 2013

Mean Temperature (F) 7-Day Mean ending Mar 28, 2013

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Mar 28, 2013

Mean Temperature Anomaly (F) 7-Day Mean ending Mar 28, 2013

Source: NOAA/National Weather Service