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

Natural Gas

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Natural Gas Weekly Update

for week ending October 28, 2015 | Release date: Ootober 29, 2015 | Next release: November 5, 2015 | Previous weeks

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

In the News:

World's first LNG-powered container ship, the Isla Bella of the Marlin class, begins service

The General Dynamics shipyard in San Diego delivered the world's first liquefied natural gas (LNG) powered containership to TOTE Maritime on October 16. The 764-foot long Isla Bella is the first of the Marlin class, a new class of container ship built in the United States, making it Jones Act-qualified for shipments between U.S. ports. The ship was built by the National Steel and Shipbuilding Company, a division of General Dynamics.

Delivered nearly two months ahead of schedule, the Isla Bella will operate out of Jacksonville, Florida, providing service to and from San Juan, Puerto Rico. The second ship of the class, the Perla del Caribe, will be delivered in early 2016 and will service the same trade route. These ships join a small group of LNG-powered ships, which currently number fewer than 100, excluding LNG tankers, according to data from DNV GL Maritime. They are the first in the largest category of vessels–container ships, numbering in the tens-of-thousands–to be built with dual-fuel propulsion intent on employing LNG as the primary fuel.

LNG-powered vessels directly support the global implementation of rules set by the International Maritime Organization in November 1973 through the International Convention for the Prevention of Pollution from Ships (MARPOL, or marine pollution) for reduced pollution by marine transport. MARPOL regulations, and amendments, have called for emission controls since 2012, and for even more stringent requirements in Emission Control Areas (ECA) that include coastal areas in North America and the Caribbean Sea, where TOTE Maritime operates.

According to TOTE Maritime, the use of natural gas as the primary fuel for Marlin class vessels will reduce nitrogen oxides, sulfur oxides, and carbon dioxide emissions from these ships by more than 70% compared with the ships that they will replace.

However, because LNG is not readily available today in most U.S. harbors, the challenge that must be met in order to make LNG a solution in meeting MARPOL regulations will be the development of a comprehensive LNG supply and distribution network for the marine market. To address this, TOTE has partnered with WesPac Midstream LLC, a LNG supplier, and its affiliate Clean Marine Energy LLC to build North America's first LNG bunker (supply) barge to service TOTE's LNG-fueled ships.

This bunkering barge will be constructed in Conrad Orange Shipyard in Orange, Texas, and is expected to be delivered in early 2016, with planned deployment to Jacksonville, Florida, to serve the Marlin class container ships, as well as other LNG-powered vessels operating there. WesPac will build a Jacksonville LNG facility, in conjunction with Pivotal LNG, to support the bunkering process.

WesPac Midstream plans to construct additional LNG fueling barges and facilities to provide shipping industry logistics for other North American ports.

Overview:

(For the Week Ending Wednesday, October 28, 2015)

Natural gas prices fell at many market locations again this report week (Wednesday, October 21, to Wednesday, October 28). The Henry Hub spot price fell 26¢ from $2.36 per million British thermal units (MMBtu) last Wednesday to $2.10/MMBtu yesterday.
At the New York Mercantile Exchange, the price of the near-month (November 2015) futures contract fell by 37¢ from $2.404/MMBtu last Wednesday to $2.033/MMBtu yesterday. The November futures contract settled on Wednesday, and, starting today, December is now the prompt-month contract.
Working natural gas in storage increased by 63 billion cubic feet (Bcf), rising to 3,877 Bcf as of Friday, October 23. The net injection into storage resulted in storage levels 12% above a year ago and 4% above the five-year average for this week.
The total rig count was flat at 787 units as of Friday, October 23, according to data from Baker Hughes Incorporated. This is 59% lower than last year at this time. Oil rigs declined by 1 unit to 594 and natural gas rigs increased by 1 to 193.
The natural gas plant liquids composite price at Mont Belvieu continued to decline, falling by 5% to $4.83/MMBtu for the week ending October 23. All liquids prices fell this week, with ethane falling the least (-0.7%) and isobutane falling the most (-8.1%). Crude oil prices have been inching down since mid-month, which is likely applying downward pressure on liquids prices.

more summary data

Prices/Demand/Supply:

Prices are down at most market locations. The Henry Hub spot price fell 26¢ from $2.36/MMBtu last Wednesday to $2.10 yesterday, representing an 11% decrease over the week. The biggest movement for the week was on Monday, when the price fell by 13¢. Some traders cited mild weekend weather in combination with forecasts for warm weather for the next 6-10 days.

The Cheyenne Hub in Wyoming fell by 6¢ to $2.06/MMBtu. The PG&E Citygate price, serving Northern California, fell 17¢ to $2.65/MMBtu. In contrast, the Chicago Citygate price rose by 10¢, closing at $2.44/MMBtu, after increasing 8¢ yesterday.

Nationally, the weather was mixed for the report week. The Northeast, Rockies, and Pacific Northwest all experienced colder temperatures week-on-week, while warmer weather prevailed across other areas of the country.

Prices mixed in the Northeast. New England saw colder weather this report period compared to the previous one, and experienced significant price increases because of ongoing pipeline constraints into the region. Algonquin Citygate, which serves Boston-area consumers, opened at $2.82/MMBtu last Wednesday and closed at $6.25 yesterday, after peaking on Monday at $6.55.

In contrast, at Transcontinental Pipeline's Zone 6 trading point, which serves New York City, prices declined, opening at $2.17/MMBtu last Wednesday and falling to $2.10 yesterday.

Marcellus prices fall. Marcellus prices fell pretty consistently this report period, erasing last week's gains. At Tennessee's Zone 4 Marcellus trading point, prices began at $1.19/MMBtu last Wednesday and fell to $1.04 yesterday. Similarly, on Transco's Leidy Line prices drifted down from $1.15/MMBtu to $1.06 Wednesday to Wednesday.

Nymex prices are down. The Nymex near-month futures price (November 2015) fell by 37¢ over the report period, from $2.404/MMBtu last Wednesday to $2.033 yesterday. The price fell by 22¢ (10%) on Monday alone. The current price level is noteworthy because it is the lowest that any near-month futures price has been since late April 2012, which is remembered as the summer of remarkably low natural gas prices.

In addition to relatively high storage levels and year-over-year production growth entering this winter, the anticipation that El Nino will moderate the upcoming winter temperatures may be contributing to the lower prices. The winter strip, which averages the November through March Nymex contracts, settled yesterday at $2.349/MMBtu. This is very low compared to previous years. Last year's winter strip price on October 28, for example, was $3.750.

The November futures contract settled on Wednesday, and December is now the prompt-month contract. On Wednesday, the December contract closed at $2.298/MMBtu, significantly higher than the November contract at expiration.

Supply decreases slightly. Total supply fell again this week, decreasing by 0.5% according to data from Bentek Energy. Although dry production was down by 0.2%, or about 0.2 Bcf/d, this week's supply decrease was driven by a decline in Midwest imports from Canada, which reduced supply by 0.4 Bcf/d. This was only partially offset by increased imports into the Northeast and West. LNG sendout this week was very close to flat.

Consumption decreases slightly. Week-over-week total consumption fell by 0.4%. Residential/commercial consumption drove the decrease, falling 2.2%, or 0.4 Bcf/d. The power sector had increased consumption, rising by 1.1%, or 0.3 Bcf/d, led by increased power burn in Texas and the Southeast. Exports to Mexico were down, and industrial consumption was essentially flat.

more price data

Storage

Working gas stocks are near their highest levels since 2012. Despite the below-average weekly inventory build, working gas climbed closer to the all-time record high of 3,929 Bcf reported for the week ending November 2, 2012. Injections over the next two weeks will need to exceed the five-year (2010-14) average in order to reach this record level. At this point in 2012, working gas stocks totaled 3,908 Bcf. Working gas stocks in the Producing region are well above the record level of 1,297 Bcf reported for this region in November 2013.

Net storage injection is lower than both the five-year average and last year's builds. The net injection reported for the week ending October 23 was 63 Bcf, down from 81 Bcf the previous week. This injection compares with the five-year average increase of 73 Bcf for the week and last year's increase of 88 Bcf. Working gas inventories for the report week were 409 Bcf (12%) higher than last year at this time and 153 Bcf (4%) higher than the five-year (2010-14) average.

Storage injections are smaller than market expectations. Market expectations, on average, called for a build of 69 Bcf for this week. When the EIA storage report was released at 10:30 a.m. on October 29, the December Nymex price rose about 2¢, to $2.36/MMBtu, and remained near that level in the following hour.

From April 3 (the beginning of the injection season) through October 23, net storage injections totaled 2,416 Bcf, or 219 Bcf lower than the 2,635 Bcf injected during the same 30 weeks in 2014. During these weeks for the years 2010-14, net injections into storage averaged 2,073 Bcf. The estimated average unit value of the natural gas put into storage from April 3 to October 23 this year is $2.70/MMBtu, 36% lower than the average value of $4.22/MMBtu for the same 30 weeks last year. The highest winter-month Nymex price (for the January 2016 contract) in trading for the week ending October 23 averaged $2.70/MMBtu. This price is 34¢/MMBtu more than the November Nymex contract price. A year ago, the difference was 36¢/MMBtu.

Temperatures during the storage report week are close to normal. Temperatures in the Lower 48 states averaged 57° for the storage report week, 1° warmer than the 30-year normal temperature and 1° cooler than the average temperature during the same week last year. There were 68 population-weighted heating degree days (HDD) during this report week, 9 HDD more than the five-year average and 8 HDD more than during the same period last year. There were also 10 population-weighted cooling degree days (CDD) this report week, 2 CDD more than the five-year average and 3 CDD more than this week last year.

more storage data

Spot Prices ($/MMBtu)	Thu, 22-Oct	Fri, 23-Oct	Mon, 26-Oct	Tue, 27-Oct	Wed, 28-Oct
Henry Hub	2.34	2.27	2.14	2.07	2.10
New York	2.38	2.25	2.16	1.99	2.10
Chicago	2.36	2.30	2.31	2.36	2.44
Cal. Comp. Avg,*	2.51	2.41	2.41	2.39	2.40
Futures ($/MMBtu)
November contract	2.386	2.286	2.062	2.092	2.033
December contract	2.583	2.493	2.353	2.361	2.298
*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: (10/21/15 - 10/28/15)
	Percent change for week compared with:
	last year	last week
Gross production	1.54%	-0.21%
Dry production	1.52%	-0.21%
Canadian imports	-2.34%	-4.07%
West (net)	0.91%	2.20%
Midwest (net)	-33.04%	-17.56%
Northeast (net)	-394.14%	21.88%
LNG imports	239.49%	3.92%
Total supply	1.43%	-0.47%
Source: BENTEK Energy LLC

U.S. consumption - Gas Week: (10/21/15 - 10/28/15)
	Percent change for week compared with:
	last year	last week
U.S. consumption	7.3%	-0.3%
Power	14.8%	1.1%
Industrial	-0.2%	-0.1%
Residential/commercial	6.5%	-2.2%
Total demand	8.6%	-0.4%
Source: BENTEK Energy LLC

Rigs
	Fri, October 23, 2015	Change from
	Fri, October 23, 2015	last week	last year
Oil rigs	594	-0.17%	-62.76%
Natural gas rigs	193	0.52%	-41.87%
Miscellaneous	N/A	N/A	N/A

Rig numbers by type
	Fri, October 23, 2015	Change from
	Fri, October 23, 2015	last week	last year
Vertical	109	-0.91%	-69.81%
Horizontal	591	0.00%	-56.38%
Directional	87	1.16%	-58.77%
Source: Baker Hughes Inc.

Working gas in underground storage
	Stocks billion cubic feet (bcf)
Region	2015-10-23	2015-10-16	change
East	1,994	1,961	33
West	531	524	7
Producing	1,352	1,329	23
Total	3,877	3,814	63
Source: U.S. Energy Information Administration

Working gas in underground storage
	Historical comparisons
	Year ago (10/23/14)		5-year average (2010-2014)
Region	Stocks (Bcf)	% change	Stocks (Bcf)	% change
East	1,907	4.6	2,008	-0.7
West	489	8.6	518	2.5
Producing	1,072	26.1	1,197	12.9
Total	3,468	11.8	3,724	4.1
Source: U.S. Energy Information Administration

Temperature -- heating & cooling degree days (week ending Oct 22)
		HDD deviation from:			CDD deviation from:
Region	HDD Current	normal	last year	CDD Current	normal	last year
New England	117	9	52	0	0	-2
Middle Atlantic	106	9	35	0	0	0
E N Central	96	-7	-9	0	-1	0
W N Central	80	-23	-5	3	2	3
South Atlantic	75	20	27	22	-1	5
E S Central	66	12	11	2	-6	2
W S Central	13	-10	-1	37	12	6
Mountain	63	-35	7	13	4	-2
Pacific	11	-27	-3	7	1	7
United States	68	-8	8	10	0	3
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration