In the News:
With nuclear plants down, Japan turns to more coal and less LNG
On September 15, Japan shut down its last operating nuclear reactor, unit 4 of Kansai Electric Power Company's Ohi nuclear power plant, for maintenance. Unit 3 at the same facility was shut down earlier in September, and many analysts expect that none of Japan's reactors will restart by the end of the year. Since the 2011 accident at Fukushima, Japan has relied less on nuclear energy. In the eight months before the shutdown at Kansai, nuclear power output accounted for only 2% of Japan's electricity needs, compared to around 30% before the Fukushima accident.
As nuclear output declined, Japanese power companies have had to turn to more expensive fuels for power generation, especially heavy fuel oil, crude oil, and liquefied natural gas (LNG). However, both liquids and LNG prices have grown significantly since 2011, and power companies have been looking for more economic ways to generate power, with coal being one such option. Coal consumption in the electric power sector from January through August was 13% higher in 2013 than in 2012. In March and April, Tohoku Electric restarted 2 gigawatts (GW) of coal-fired capacity damaged in the 2011 earthquake, and in April, Tokyo Electric Power Company conducted test runs of 1.6 GW of new coal-fired plants which should start commercial operations in December.
Increased use of coal-fired generation, coupled with modestly increased output from nuclear plants from January through August, allowed Japanese power companies to decrease the use of more expensive fuels. For January through August, consumption of crude oil (-24%), heavy fuel oil (-16%), and LNG (-3%) were all lower in 2013 than in 2012. However, with the onset of winter and the shutdown of the last operating nuclear reactor, liquids and LNG consumption for power generation may have to increase in order to meet demand.
Overview:
(For the Week Ending Wednesday, September 25, 2013)
- Natural gas prices at virtually all trading locations fell by between 5% and 9% during the report week (Wednesday, September 18 – Wednesday, September 25). The Henry Hub spot price decreased 19 cents from $3.71 per million British thermal units (MMBtu) last Wednesday to $3.52 per MMBtu yesterday.
- The price of the near-month (October 2013) contract on the New York Mercantile Exchange (Nymex) also fell during the week. The October contract decreased from $3.713 per MMBtu last Wednesday to $3.493 yesterday.
- Working natural gas in storage increased to 3,386 Bcf as of Friday, September 20, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). A net storage injection of 87 Bcf for the week resulted in storage levels 5.0% below year-ago levels and 0.9% above the 5-year average.
- The natural gas rotary rig count, as reported by Baker Hughes Inc., fell from the previous week by 15, to 386 active units. The oil rig count increased by 8, to 1,369.
- The weekly average natural gas plant liquids composite price was essentially flat this week (covering September 16 through 20), at $10.50 per MMBtu. Ethane and propane spot prices were nearly flat; butane and isobutane spot prices rose by 1.3% and 2.2%, respectively; the natural gasoline spot price decreased by 1.8%, falling with crude oil prices.
Prices/Demand/Supply:
Natural gas prices decreased over the report week at most locations. The Henry Hub spot price fell from $3.71 per MMBtu on Wednesday a week ago to $3.52 per MMBtu yesterday, a decrease of 5%. Spot prices at most locations moved similarly, decreasing between 5% and 9% over the report week, and declining steadily over the week. Transco Zone 6 New York, servicing New York City customers, fell by 9%, from $3.91 per MMBtu to $3.57 per MMBtu yesterday. The Northwest Sumas price point was the one exception to the weekly price decline trend, increasing from $2.62 per MMBtu last week to $3.15 per MMBtu yesterday; despite this, natural gas at that trading location ended the week 37 cents per MMBtu below the Henry Hub price.
Nymex gas prices fell with spot prices this week. The October contract fell from $3.713 per MMBtu last Wednesday to $3.493 yesterday. The price of the 12-month strip (the average of the 12 contracts between October 2013 and September 2014) fell from $3.937 per MMBtu on Wednesday last week to $3.750 per MMBtu yesterday.
Targa completes Galena Park liquefied petroleum gas (LPG) export terminal expansion. Earlier in the month, Targa completed its Galena Park export terminal expansion, increasing its LPG export capabilities by 20,000 barrels per day. If used at capacity, the Galena Park expansion could increase LPG exports by 7% compared with recent volumes. This could also provide price support for propane and butane going forward. Most U.S. LPG exports are propane (about 90%), with normal butane accounting for the rest.
Consumption declined during the report week. According to data from Bentek Energy LLC, total consumption fell 5.6%, driven by a steep decrease in consumption for power generation in every region of the country. With weather moderating, air conditioning loads have dropped off. Consumption of gas for power generation in the Southeast, Texas, and the Northeast, the three largest consumers of natural gas in this sector, decreased by 12.1%, 25.7%, and 12.5%, respectively. Industrial and residential/commercial demand both increased, rising by 1.0% and 2.7%, respectively. Pipeline exports to Mexico rose by 16.6% over the report week, but accounted for a relatively small component of natural gas disposition.
Supply declined during the report week, but less steeply than consumption. Bentek reported that total supply fell 1.3%, driven by a production decline of 1.2%. Northwest and Midwest reductions in gas imports from Canada led to a decline in total gas imports from Canada of 4.4%. Canadian flows to the U.S. Northeast were flat at near zero. Imports of LNG were up for the report week, with shipments arriving in the Sabine Pass Terminal in the Gulf Coast on Tuesday and Wednesday, but totals remained close to historical lows.
Storage
Working natural gas in storage increased to 3,386 Bcf as of Friday, September 20. The 87-Bcf gain in storage levels was larger than both the 79-Bcf injection that occurred during the same week in 2012 and the 5-year average increase of 75 Bcf. Current inventories are 179 Bcf (5.0%) less than last year at this time and 30 Bcf (0.9%) above the 5-year average of 3,356 Bcf.
The net injection was larger than market expectations of 77 Bcf. The larger-than-expected build contributed a little to natural gas prompt-month Nymex futures prices decreasing by about a penny per MMBtu to just around $3.44 per MMBtu immediately following WNGSR's release. In the hour following the release, prices remained at that level.
Two of the three regions posted larger-than-average builds. The East remained below 5-year average storage levels as net injections were 54 Bcf this week. Despite being 7 Bcf larger than its 5-year average injection of 47 Bcf, eastern stocks remained 6.2% below the 5-year average for the region. Inventories in the Producing region grew by 25 Bcf this week, 5 Bcf larger than its 5-year average injection of 20 Bcf, and stocks in that region are now 9.2% over its 5-year average levels. The West region grew by 8 Bcf, the same as its 5-year average injection.
Temperatures during storage report week were closetonormal. Temperatures in the Lower 48 states averaged 67.0 degrees for the week, 0.3 degree cooler than the 30-year normal temperature and 0.6 degree cooler than the same period last year. The 30-year normal temperatures for the storage report week are 67.3 degrees. Temperatures for the storage report week last year averaged 67.6 degrees.
See also:


Spot Prices ($/MMBtu) | Thu, 19-Sep |
Fri, 20-Sep |
Mon, 23-Sep |
Tue, 24-Sep |
Wed, 25-Sep |
---|---|---|---|---|---|
Henry Hub |
3.73 |
3.68 |
3.64 |
3.59 |
3.52 |
New York |
3.87 |
3.80 |
3.77 |
3.67 |
3.57 |
Chicago |
3.84 |
3.74 |
3.72 |
3.64 |
3.55 |
Cal. Comp. Avg,* |
3.85 |
3.77 |
3.74 |
3.67 |
3.58 |
Futures ($/MMBtu) | |||||
October Contract |
3.720 |
3.687 |
3.602 |
3.492 |
3.493 |
November Contract |
3.795 |
3.763 |
3.677 |
3.559 |
3.546 |
*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: (9/18/13 - 9/25/13) | ||
---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
Gross Production | -0.66%
|
-1.24%
|
Dry Production | -0.65%
|
-1.22%
|
Canadian Imports | -7.78%
|
-4.35%
|
West (Net) | 17.02%
|
-2.03%
|
MidWest (Net) | -6.36%
|
-4.49%
|
Northeast (Net) | -103.82%
|
-160.00%
|
LNG Imports | -10.59%
|
36.47%
|
Total Supply | -1.25%
|
-1.34%
|
Source: BENTEK Energy LLC |
U.S. Consumption - Gas Week: (9/18/13 - 9/25/13) | ||
---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
U.S. Consumption | -7.67%
|
-6.16%
|
Power | -14.03%
|
-16.24%
|
Industrial | -1.28%
|
1.02%
|
Residential/Commercial | -5.40%
|
2.71%
|
Total Demand | -7.68%
|
-5.60%
|
Source: BENTEK Energy LLC |


Rigs | |||
---|---|---|---|
Fri, September 20, 2013 |
Change from |
||
last week |
last year |
||
Oil Rigs | 1,369 |
0.59% |
-2.35% |
Natural Gas Rigs | 386 |
-3.74% |
-14.98% |
Miscellaneous | 6 |
0.00% |
100.00% |
Rig Numbers by Type | |||
---|---|---|---|
Fri, September 20, 2013 |
Change from |
||
last week |
last year |
||
Vertical | 421 |
-5.18% |
-17.13% |
Horizontal | 1,091 |
1.39% |
-5.05% |
Directional | 249 |
0.40% |
23.27% |
Source: Baker Hughes Inc. |
Working Gas in Underground Storage | ||||
---|---|---|---|---|
Stocks billion cubic feet (bcf) |
||||
Region | 9/20/13
|
9/13/13
|
change |
|
East | 1,742 |
1,688 |
54
|
|
West | 519 |
511 |
8
|
|
Producing | 1,125 |
1,100 |
25
|
|
Total | 3,386 |
3,299 |
87
|
|
Source: U.S. Energy Information Administration |
Working Gas in Underground Storage | |||||
---|---|---|---|---|---|
Historical Comparisons |
|||||
Year ago (9/20/12) |
5-year average (2008-2012) |
||||
Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
East | 1,914 |
-9.0 |
1,857 |
-6.2 |
|
West | 501 |
3.6 |
469 |
10.7 |
|
Producing | 1,149 |
-2.1 |
1,030 |
9.2 |
|
Total | 3,565 |
-5.0 |
3,356 |
0.9 |
|
Source: U.S. Energy Information Administration |
Temperature -- Heating & Cooling Degree Days (week ending Sep 19) | ||||||||
---|---|---|---|---|---|---|---|---|
HDD deviation from: |
CDD deviation from: |
|||||||
Region | HDD Current |
normal |
last year |
CDD Current |
normal |
last year |
||
New England | 49
|
19
|
24
|
4
|
1
|
2
|
||
Middle Atlantic | 46
|
24
|
33
|
1
|
-11
|
-4
|
||
E N Central | 46
|
19
|
16
|
6
|
-7
|
-1
|
||
W N Central | 30
|
-1
|
-10
|
21
|
3
|
12
|
||
South Atlantic | 15
|
9
|
10
|
57
|
-3
|
0
|
||
E S Central | 6
|
0
|
4
|
51
|
3
|
3
|
||
W S Central | 0
|
-2
|
-3
|
111
|
31
|
49
|
||
Mountain | 13
|
-23
|
-15
|
54
|
16
|
18
|
||
Pacific | 3
|
-8
|
1
|
43
|
13
|
-13
|
||
United States | 25
|
6
|
9
|
39
|
4
|
5
|
||
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration |
Average temperature (°F)
7-Day Mean ending Sep 19, 2013

Source: NOAA/National Weather Service
Deviation between average and normal (°F)
7-Day Mean ending Sep 19, 2013

Source: NOAA/National Weather Service