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Natural Gas Weekly Update

for week ending October 14, 2015   |  Release date:  October 15, 2015   |  Next release:  October 22, 2015   |   Previous weeks

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

In the News:

National Fuel Gas adds new gas flows out of Marcellus/Utica this week

National Fuel Gas Supply Corporation on October 8 was given permission by the Federal Energy Regulatory Commission (FERC) to immediately begin full service on the expansion of its north-south gas pipeline in western Pennsylvania. According to National Fuel, the project would serve two goals: (1) the addition of transportation services for natural gas produced in western Pennsylvania, and (2) the enhancement of the integrity and reliability of the Line N system. When at full operation, the Line N Expansion will provide an additional 172 million cubic feet per day (MMcf/d) of new capacity to this pipeline, raising Line N's total capacity to 624 MMcf/d.

The Line N pipeline is located on the western side of Pennsylvania running through the Marcellus and Utica shale plays, north-to-south through Washington, Allegheny, Beaver, Venango, and Mercer counties. The Westside Expansion interconnects with Tennessee Gas Pipeline (TGP) on the north end and Texas Eastern Transmission Company (Tetco) pipeline on the south end to move Appalachian Basin gas to premium markets in New York and Canada via TGP and to the Midwest and Southeast markets through its southern Tetco interconnect. National Fuel Gas contracted the increased capacity to Range Resources Appalachia LLC and to Seneca Resources, National Fuel Gas Supply's subsidiary, with 143 MMcf/d and 30 MMcf/d being allocated, respectively.

A key feature of the project is its infrastructure upgrade, which was accomplished by replacing a 68-year old, 23-mile section of 20-inch-diameter, bare steel high pressure pipe with a 24-inch high strength coated steel pipeline rated for 1,440 pounds per square inch (PSIG) of pressure, nearly twice as much as the previous 787 PSIG maximum operating pressure. This Line N West Side Expansion is a brownfield project constructed along the course of the existing pipeline, adding an additional 3,550 horsepower of compression at National Fuel's Mercer Compressor Station and a modified compressor and mainline valve assemblies at the Henderson Compressor Station to support the increased capacity and higher pressure that will be part of systems operation. The original pipe will be abandoned in-place.

Originally planned for a November 1 in service date, this project entered service more than three weeks ahead of schedule.

Overview:

(For the Week Ending Wednesday, October 14, 2015)

  • Natural gas prices showed little overall change at most market locations during the report week (Wednesday, October 7, to Wednesday, October 14). The Henry Hub spot price fell slightly from $2.46 per million British thermal units (MMBtu) last Wednesday to $2.44/MMBtu yesterday.
  • At the New York Mercantile Exchange, the price of the near-month (November 2014) futures contract rose from $2.474/MMBtu last Wednesday to $2.518/MMBtu yesterday.
  • Working natural gas in storage increased by 100 billion cubic feet (Bcf), rising to 3,733 Bcf as of Friday, October 9. The net injection into storage resulted in storage levels 14% above a year ago and 5% above the five-year average for this week.
  • The total rig count declined by 14 units to 795 as of Friday, October 9, according to data from Baker Hughes Incorporated. This is 1,135 units below the level at the same time last year. Oil rigs declined by 9 units to 605 (1,004 below last year's level), and natural gas rigs fell by 6 to 189 (131 below last year's level).
  • The natural gas plant liquids composite price at Mont Belvieu increased by 5.6% to $5.34/MMBtu for the week ending October 9. Propane, isobutane, butane, and natural gasoline prices increased by 4.1%, 5.9%, 6.5%, and 11.5%, respectively, while ethane prices decreased by 0.2%. Propane is used to dry crops, and the USDA projects that this fall's corn harvest will be slightly larger than last year's record harvest. Propane inventories are currently at high levels in the Midwest.

more summary data

Prices/Demand/Supply:

Price changes are mixed and small. Price movements at points around the Gulf Coast were minor this week, with most prices declining by a few cents. Henry Hub spot prices remained relatively low during the report week, falling from $2.46/MMBtu last Wednesday to $2.44/MMBtu yesterday. At the Chicago Citygate, prices rose slightly, from $2.46/MMBtu to $2.50/MMBtu. Most other Midwest prices declined slightly. In the Rockies and farther west, prices increased slightly. The price at the Opal Hub in Wyoming rose from $2.32/MMBtu last Wednesday to $2.36/MMBtu yesterday. In California, price increases were more pronounced, with prices rising 14¢ at the Southern California Citygate. Increased demand and scheduled service interruptions on the SoCal Gas's system may have contributed to the increase in California prices this week.

Prices mixed in the Northeast. Price movements at Northeast market areas were also moderate this week. At the Algonquin Citygate, which serves Boston-area consumers, the spot price rose from $2.77/MMBtu to $2.83/MMBtu for an overall gain of 6¢. At Transcontinental Pipeline's Zone 6 trading point, which serves New York City, prices fell from $2.45/MMBtu to $2.38/MMBtu.

Marcellus prices rise. At Tennessee's Zone 4 Marcellus trading point, prices rose from 78¢/MMBtu last Wednesday to 89¢/MMBtu yesterday. Similarly, on Transco's Leidy Line prices rose from 84¢/MMBtu to 98¢/MMBtu Wednesday to Wednesday. At Dominion South, which serves customers in portions of Pennsylvania, Ohio, Maryland, West Virginia, and Virginia, prices began the report week at 98¢/MMBtu, fluctuated through the week, and closed yesterday at $1.18/MMBtu.

Nymex prices are up. The price of the near-month (November 2015) contract rose slightly from $2.474/MMBtu last Wednesday to $2.518/MMBtu yesterday. The price of the 12-month strip (the average of the 12 contracts between November 2015 and October 2016) rose from $2.729/MMBtu last Wednesday to $2.782/MMBtu yesterday.

Supply decreases. Total supply fell by 0.2% this week, with a 0.9% decrease in dry production leading the decline, according to data from Bentek Energy. Although dry production declined, it is still 2.7% greater than the year-ago level. Canadian imports rose by 9.4%, with imports to the Midwest increasing by 17.9%. Sendout of liquefied natural gas (LNG) increased, but still remains at minimal levels.

Consumption increases slightly. Week-over-week consumption rose by 1.1%. Residential/ commercial and industrial consumption fell by 6.5% and 0.8%, respectively, while consumption of natural gas for power generation (power burn) rose 7.5%. Although seasonal demand is relatively low in early fall, power burn has been very high this year; in October, power burn averaged 25.2 Bcf/d, which is 25% more than the average of the previous five years. Several factors have contributed to the rise in power burn, including lower natural gas prices and coal retirements.

more price data

Storage

Storage level nears five-year maximum. With a net injection reported for the week ending October 9 of 100 Bcf, inventories rose to 3,733 Bcf, 21 Bcf below the five-year maximum for this time of year. This injection compares with the five-year average increase of 87 Bcf for the week and last year's increase of 96 Bcf. Working gas inventories for the report week were 447 Bcf (14%) higher than last year at this time and 168 Bcf (5%) higher than the five-year (2010-14) average.

Storage injections are larger than market expectations. Market expectations, on average, called for a build of 92 Bcf for this week. When the EIA storage report was released at 10:30 a.m. on October 15, the November Nymex price fell 6¢, to around $2.51/MMBtu, and fell an additional 5¢ in the following hour.

From April 3 (the beginning of the injection season) through October 9, net storage injections totaled 2,272 Bcf, or 181 Bcf lower than the 2,453 Bcf injected during the same 28 weeks in 2014. During these weeks for the years 2010-14, net injections into storage averaged 1,914 Bcf. The estimated average unit value of the natural gas put into storage from April 3 to October 9 this year is $2.72/MMBtu, 36% lower than the avevrage value of $4.26/MMBtu for the same 28 weeks last year. The highest winter-month Nymex price (for the January 2016 contract) in trading for the week ending October 9 averaged $2.84/MMBtu. This price is 35¢/MMBtu more than the November Nymex contract price. A year ago, the difference was 23¢/MMBtu.

Temperatures during the storage report week are normal. Temperatures in the Lower 48 states averaged 61°for the storage report week, equal to the 30-year normal temperature and 1° cooler than the average temperature during the same week last year. There were 43 population-weighted heating degree days (HDD) during this report week, 5 HDD more than the five-year average and 3 HDD fewer than during the same period last year. There were also 14 population-weighted cooling degree days (CDD) this report week, 6 CDD fewer than the five-year average and 9 CDD fewer than this week last year.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
08-Oct
Fri,
09-Oct
Mon,
12-Oct
Tue,
13-Oct
Wed,
14-Oct
Henry Hub
2.44
2.36
2.44
2.43
2.44
New York
2.32
2.22
2.40
2.44
2.38
Chicago
2.44
2.40
2.50
2.48
2.50
Cal. Comp. Avg,*
2.62
2.60
2.70
2.70
2.69
Futures ($/MMBtu)
November contract
2.498
2.502
2.535
2.498
2.518
December contract
2.712
2.718
2.752
2.721
2.732
*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
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (10/7/15 - 10/14/15)
Percent change for week compared with:
 
last year
last week
Gross production
2.74%
-0.86%
Dry production
2.72%
-0.86%
Canadian imports
-4.48%
9.42%
      West (net)
7.14%
3.34%
      Midwest (net)
-19.34%
17.87%
      Northeast (net)
-52.65%
2.06%
LNG imports
N/A
N/A
Total supply
2.27%
-0.19%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (10/7/15 - 10/14/15)
Percent change for week compared with:
 
last year
last week
U.S. consumption
0.6%
1.0%
Power
11.8%
7.5%
Industrial
-3.1%
-0.8%
Residential/commercial
-10.6%
-6.5%
Total demand
2.2%
1.1%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, October 09, 2015
Change from
 
last week
last year
Oil rigs
605
-1.47%
-62.40%
Natural gas rigs
189
-3.08%
-40.94%
Miscellaneous
1
0.00%
0.00%
Rig numbers by type
Fri, October 09, 2015
Change from
 
last week
last year
Vertical
114
-2.56%
-69.19%
Horizontal
598
-1.81%
-55.80%
Directional
83
0.00%
-59.90%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2015-10-09
2015-10-02
change
East
1,912
1,861
51
West
521
510
11
Producing
1,300
1,262
38
Total
3,733
3,633
100
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(10/9/14)
5-year average
(2010-2014)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
1,818
5.2
1,928
-0.8
West
473
10.1
504
3.4
Producing
995
30.7
1,132
14.8
Total
3,286
13.6
3,565
4.7
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Oct 08)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
83
8
19
0
0
0
Middle Atlantic
68
4
21
0
-3
0
E N Central
59
-8
-23
0
-4
0
W N Central
70
5
-17
2
-4
1
South Atlantic
32
1
4
27
-10
-7
E S Central
22
-8
-11
20
-2
0
W S Central
10
3
3
42
-3
-18
Mountain
43
-23
-10
18
-3
-2
Pacific
11
-11
7
13
-2
-39
United States
43
-4
-3
14
-5
-9
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Oct 08, 2015

Mean Temperature (F) 7-Day Mean ending Oct 08, 2015

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Oct 08, 2015

Mean Temperature Anomaly (F) 7-Day Mean ending Oct 08, 2015

Source: NOAA/National Weather Service