U.S. Energy Information Administration - EIA - Independent Statistics and Analysis

Natural Gas

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Natural Gas Weekly Update

for week ending July 2, 2014 | Release date: July 3, 2014 | Next release: July 10, 2014 | Previous weeks

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

In the News:

Egypt to become natural gas importer, as exports continue to fall

During a June 25 state visit by Egypt's President Abdel-Fattah el-Sissi to Algeria, the Algerian state-owned oil company, Sonatrech, agreed to deliver 5 liquefied natural gas (LNG) cargoes (equivalent to about 15 billion cubic feet of natural gas) to Egypt later this year. The demand for natural gas in Egypt has been growing faster than production since 2010. As a result, the domestic market has been experiencing gas shortages.

Egypt is highly reliant on natural gas for power generation, and power outages have been common over the past few years, especially during the summer cooling season. Recent outages are due mainly to a lack of natural gas or other fuels, not to a lack of generation capacity. Additionally, the Egyptian Natural Gas Holding Company (EGAS) has had to cut gas supplies to some industrial consumers, mainly producers of methanol, cement, and fertilizer, in order to make more gas available to electric generators. In Egypt, natural gas and electricity consumption are subsidized. Residential and small commercial consumers pay less than $2 per million British thermal unit (MMBtu) for natural gas.

To minimize domestic gas shortages, natural gas originally intended to be exported as LNG has increasingly been diverted to domestic consumers. Natural gas exports peaked in 2009 and have been steadily declining since then. Egypt has two LNG export facilities. The facility at Damietta has been idle since 2013 because it has not had enough natural gas to continue to operate. More recently, in January 2014, BG, the operator of the second export facility, declared a force majeure on LNG exports because of a lack of gas. Revenue from exports of natural gas and its derivatives was down 81% in April 2014 versus April 2013 according to Egypt's Information and Decision Support Center. Egypt continues to export small volumes of pipeline gas to Jordan.

In addition to the LNG imported to alleviate domestic gas shortages, Egypt's LNG export facility operators have pursued preliminary agreements to import gas via pipeline to their underutilized LNG export plants. In June, BG signed a preliminary agreement with partners in Israel's Leviathan field to potentially import about 250 billion cubic feet (Bcf) of gas per year for 15 years. This follows a similar preliminary agreement signed by the partners in the Damietta export facility to potentially import 160 Bcf of gas per year from Israel's Tamar field.

There are still significant hurdles before any gas can be imported into Egypt. Before imports from Israel could begin, the companies involved would have to negotiate final, binding agreements, which would require government approvals in both Egypt and Israel. Additionally, new underwater pipelines would need to be built in order to move the gas from the production fields to the LNG export terminals. Imports of LNG from Algeria also face hurdles. Egypt does not currently have any facilities to import LNG, but it has been negotiating with Höegh LNG to lease a floating storage and regasification unit (FSRU). While negotiations are going on, Egypt plans on having the terminal in place and operating by the fourth quarter of 2014.

Overview:

(For the Week Ending Wednesday, July 2, 2014)

Natural gas prices decreased during the report week (Wednesday, June 25 — Wednesday, July 2) at most market locations for the second week in a row. The Henry Hub spot price decreased from $4.57/MMBtu last Wednesday to $4.39/MMBtu yesterday.
At the New York Mercantile Exchange (Nymex), the August 2014 contract began the report week on June 25 at $4.569/MMBtu. By the end of trading yesterday, it had decreased by 17.4 cents/MMBtu to $4.357/MMBtu. August took over as the front-month contract on June 27, supplanting the July contract, which settled at expiration at $4.400. The price of the 12-month strip also decreased, from $4.479/MMBtu last Wednesday to $4.289/MMBtu yesterday.
Working natural gas in storage rose to 1,929 Bcf as of Friday, June 27, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net increase in storage of 100 Bcf for the week resulted in storage levels 25.7% below year-ago levels and 29.1% below the 5-year average.
The Baker Hughes rotary rig count increased week-over-week by 15 rigs, to 1,873 as of June 27. The number of active gas-directed rigs increased by 3. The number of oil-directed rigs increased by 13. When compared to the week ending on June 28, 2013, the total rig count has increased by 125, with the oil-directed rig count rising by 168 and the gas-directed rig count decreasing by 39.
The average daily Mont Belvieu, Texas, natural gas plant liquids composite price for the week covering June 23 to June 27 was flat compared to last week (June 16-20), at $10.19/MMBtu. Prices declined for ethane and natural gasoline, by 1.3% and 0.3 %, respectively. Prices increased for isobutane and butane, by 1.1% and 0.4%, respectively, while propane remained flat compared to last week.

more summary data

Prices/Demand/Supply:

Prices decrease at most locations. The average daily Henry Hub spot price decreased by 19 cents/MMBtu from June 25 to June 27, from $4.57/MMBtu to $4.38/MMBtu, reaching its lowest level since the end of May. It partially recovered through trading on Tuesday, when it averaged $4.43/MMBtu, and decreased yesterday to $4.39/MMBtu.

Northeast price changes are more significant. Average daily natural gas spot prices in New England, New York, and Mid-Atlantic markets followed a trend similar to Henry Hub, decreasing through Friday and then rebounding through Tuesday, before declining yesterday. However, the degree of change in these markets was more significant than in the rest of the country.

At the Algonquin Citygate, which serves Boston-area consumers, the average daily spot price decreased from $4.23/MMBtu on June 25 to $3.02/MMBtu on June 27, $1.36/MMBtu below Henry Hub, with average daily weekend temperatures in Boston dropping below 70 degrees Fahrenheit. Algonquin rebounded to $4.64/MMBtu on Tuesday, or 21 cents/MMBtu above Henry Hub, with temperatures yesterday rising into the 80s. The average Algonquin spot price dropped yesterday by 63 cents/MMBtu, to $4.01/MMBtu.

Similarly, the Transco Zone 6-New York spot price decreased from $4.08/MMBtu last Wednesday to $2.90/MMBtu on Friday, $1.48/MMBtu less than Henry Hub, as New York temperatures fell into the low 70s over the weekend. It rebounded to $4.12/MMBtu on Tuesday, before dropping to $3.14/MMBtu yesterday. The spot price at Tetco-M3, which serves consumers in the Mid-Atlantic, changed by amounts that were similar to those in Boston and New York.

Nymex decreases this week. The price of the August 2014 natural gas futures contract began the report week on June 25 by settling at $4.569/MMBtu. It decreased through trading on June 27, its first day as the front-month contract, to $4.409/MMBtu, as temperatures cooled. By the end of trading Tuesday, prices partially recovered to $4.455/MMBtu, as temperatures warmed, before declining yesterday to $4.357/MMBtu.

Production and supply continue to increase. Overall supply increased for the third week in a row, by 0.1 Bcf/d from the previous week, to 73.4 Bcf/d. Total dry production also rose for the third week in a row, by 0.1 Bcf/d, to a record weekly average of 68.5 Bcf/d. Pipeline imports from Canada decreased slightly, while liquefied natural gas (LNG) sendout increased slightly.

more price data

Storage

Eighth straight week of triple-digit inventory builds. The net injection reported for the week ending June 27 was 100 Bcf, 32 Bcf larger than the 5-year average net injection of 68 Bcf and 24 Bcf larger than last year's net injection of 76 Bcf. Working gas inventories totaled 1,929 Bcf, 666 Bcf (25.7%) less than last year at this time, and 790 Bcf (29.1%) below the 5-year (2009-13) average.

Storage build is in line with market expectations. Market expectations called for a build of 100 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the August natural gas futures contract increased 6 cents to $4.39/MMBtu on the Nymex.

From the week ending on April 4 to the week ending on June 27, net storage injections have totaled 1,107 Bcf, versus 920 Bcf for the same 13 weeks in 2013, and 896 Bcf for these weeks between 2009 and 2013, on average. The average unit value of what storage holders put into storage from April 4 to June 27 was $4.60/MMBtu, 15% higher than the average value for the same 13 weeks last year of $3.99/MMBtu. The highest winter-month Nymex price (for the January 2015 contract) in trading for the week ending on June 27 averaged $4.65/MMBtu. This was 16 cents more than the current Nymex August contract price. A year ago, the difference was 27 cents/MMBtu.

There are currently 18 more weeks in the injection season, which traditionally occurs April 1 through October 31, although, in many years, injections continue into November. EIA forecasts that the end-of-October working natural gas inventory level will be 3,424 Bcf, which, as of June 27, would require an average injection of 83 Bcf per week through the end of October. EIA's forecast for the end-of-October inventory levels are below the 5-year (2009-13) average value of 3,837 Bcf. To reach the 5-year average by October 31, average weekly injections through the end of October would need to be 106 Bcf.

All three regions post larger-than-average builds. The East, West, and Producing regions had net injections of 65 Bcf (16 Bcf larger than its 5-year average injection), 16 Bcf (4 Bcf larger than its 5-year average injection), and 19 Bcf (11 Bcf larger than its 5-year average injection), respectively. Storage levels for all three regions remain below their year-ago and 5-year average levels.

Temperatures during the storage report week were warmer than normal. Temperatures in the Lower 48 states averaged 73.7 degrees for the week, 1.1 degree warmer than the 30-year normal temperature and 1.1 degree cooler than during the same period last year.

more storage data

Spot Prices ($/MMBtu)	Thu, 26-Jun	Fri, 27-Jun	Mon, 30-Jun	Tue, 1-Jul	Wed, 2-Jul
Henry Hub	4.55	4.38	4.42	4.43	4.39
New York	3.71	2.9	4.2	4.12	3.14
Chicago	4.64	4.42	4.5	4.47	4.43
Cal. Comp. Avg,*	4.86	4.63	4.82	4.79	4.75
Futures ($/MMBtu)
July Contract	4.400	Expired	Expired	Expired	Expired
August Contract	4.441	4.441	4.461	4.455	4.357
September Contact	4.420	4.389	4.440	4.436	4.348
*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: (6/25/14 - 7/2/14)
	Percent change for week compared with:
	last year	last week
Gross Production	5.69%	0.20%
Dry Production	5.63%	0.20%
Canadian Imports	-8.49%	-1.12%
West (Net)	-22.54%	2.61%
MidWest (Net)	8.45%	-0.68%
Northeast (Net)	-0.74%	-41.00%
LNG Imports	-64.59%	8.30%
Total Supply	4.27%	0.13%
Source: BENTEK Energy LLC

U.S. Consumption - Gas Week: (6/25/14 - 7/2/14)
	Percent change for week compared with:
	last year	last week
U.S. Consumption	-3.0%	2.2%
Power	-7.4%	6.9%
Industrial	1.3%	-1.3%
Residential/Commercial	1.7%	-2.3%
Total Demand	-2.2%	2.2%
Source: BENTEK Energy LLC

Rigs
	Fri, June 27, 2014	Change from
	Fri, June 27, 2014	last week	last year
Oil Rigs	1,545	0.19%	9.96%
Natural Gas Rigs	311	0.32%	-10.89%
Miscellaneous	2	0.00%	-60.00%

Rig Numbers by Type
	Fri, June 27, 2014	Change from
	Fri, June 27, 2014	last week	last year
Vertical	380	-2.06%	-13.24%
Horizontal	1,250	0.16%	15.85%
Directional	228	4.59%	-5.79%
Source: Baker Hughes Inc.

Working Gas in Underground Storage
	Stocks billion cubic feet (bcf)
Region	2014-06-27	2014-06-20	change
East	923	858	65
West	331	315	16
Producing	675	656	19
Total	1,929	1,829	100
Source: U.S. Energy Information Administration

Working Gas in Underground Storage
	Historical Comparisons
	Year ago (6/27/13)		5-year average (2009-2013)
Region	Stocks (Bcf)	% change	Stocks (Bcf)	% change
East	1,184	-22.0	1,289	-28.4
West	442	-25.1	427	-22.5
Producing	969	-30.3	1,004	-32.8
Total	2,595	-25.7	2,719	-29.1
Source: U.S. Energy Information Administration

Temperature -- Heating & Cooling Degree Days (week ending Jun 26)
		HDD deviation from:			CDD deviation from:
Region	HDD Current	normal	last year	CDD Current	normal	last year
New England	13	7	10	19	-2	-32
Middle Atlantic	2	-1	1	37	1	-22
E N Central	2	-3	1	51	10	-14
W N Central	2	-4	2	57	3	-25
South Atlantic	0	0	0	94	11	5
E S Central	0	0	0	94	15	5
W S Central	0	0	0	104	-6	-29
Mountain	4	-11	-2	67	4	6
Pacific	3	-7	-2	34	5	15
United States	2	-3	0	63	5	-8
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration