Natural Gas

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Natural Gas Weekly Update

for week ending February 24, 2016   |  Release date:  February 25, 2016   |  Next release:  March 3, 2016   |   Previous weeks

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

In the News:

Cheniere’s Sabine Pass ships first LNG cargo from the U.S. Lower 48

Sabine Pass, the first liquefied natural gas (LNG) export terminal to be constructed in the Lower 48 states, shipped its first cargo of domestically sourced natural gas on Wednesday. The LNG is being carried aboard the LNG tanker Asia Vision to Brazil's TRBA (Bahia) offshore terminal. Sabine Pass is expected to load several commissioning cargos as part of its start-up process, after which it will need the approval from the Federal Energy Regulatory Commission to operate commercially. Previously, the United States has only been exporting LNG from Alaska and occasionally re-exporting LNG from the import terminals in the Lower 48 states.

Sabine Pass, located in Cameron Parish, Louisiana, has completed construction of the first two of its six liquefaction trains, each with a capacity to liquefy 0.55 billion cubic feet per day (Bcf/d) of natural gas. Commissioning of the first liquefaction train began in the fall of 2015, but several mechanical issues delayed the start-up. Three other trains at Sabine Pass are currently under construction and are scheduled to come online in 2017-19, while the sixth train is waiting for a final investment decision.

Six other liquefaction projects are scheduled to come online this year in Australia, Malaysia, and Indonesia. They will add approximately 8% to the total global liquefaction capacity, while the two trains at Sabine Pass will add 2% to the total.

The five LNG export facilities currently under construction in the United States, including Sabine Pass, will have a total liquefaction capacity of 9.2 Bcf/d, which is equivalent to 13% of current domestic natural gas production. Nearly all of this capacity has been fully or partially contracted and is scheduled to be in service by 2019. Once all facilities under construction become operational, the United States will become the third-largest liquefaction capacity holder in the world after Australia and Qatar.

EIA has projected that the United States will become a net exporter of LNG in 2016 and a net exporter of all natural gas by 2017. LNG remains a small portion of U.S. gas trade, with most gas flowing by pipeline as imports from Canada and exports to Mexico.

Overview:

(For the Week Ending Wednesday, February 24, 2016)

  • Natural gas prices fell substantially at most market locations this report week (Wednesday, February 17, to Wednesday, February 24), with the biggest declines in the Northeast. The Henry Hub spot price fell from $1.91 per million British thermal unit (MMBtu) last Wednesday to $1.79/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the near-month (March 2016) contract fell from $1.942/MMBtu last Wednesday to $1.778/MMBtu yesterday, and was headed lower this afternoon.
  • Net withdrawals from storage totaled 117 billion cubic feet (Bcf) for the week ending February 19. Working gas levels for the previous week, February 12, were revised downward by 5 Bcf. Working gas stocks are 2,584 Bcf for the report week ending February 19. Working gas stocks are 31% and 29% above the year-ago and five-year (2011-15) levels, respectively.
  • The total oil and natural gas rig count declined by 27 units, with 514 units in service for the week ending Friday, February 19, according to data from Baker Hughes Incorporated. The oil rig count decreased by 26 units to 413, and the natural gas rig count fell by 1 unit to 101. This is the seventh consecutive double-digit weekly decline in the total rig count, and the lowest recorded natural gas rig count in the Baker Hughes dataset, which goes back to 1987.
  • The natural gas plant liquids (NGPL) composite price at Mont Belvieu, Texas, fell by a penny to $3.79/MMBtu for the week ending Friday, February 19. The spot prices of liquid products were mixed this week; propane and natural gasoline were up 2.3% and 4.4%, respectively. Isobutane, butane, and ethane were down 2.2%, 2.3%, and 6.8%, respectively.

more summary data

Prices/Demand/Supply:

Natural gas prices decline. Prices began the week at low levels and declined further at most locations across the country as weather was mild and consumption was relatively low. The Henry Hub spot price fell from $1.91/MMBtu last Wednesday to $1.79/MMBtu yesterday, February 24. Declines were similar at other major market locations. At the Chicago Citygate, the spot price fell from $1.91 /MMBtu last Wednesday to $1.80/MMBtu yesterday. At the SoCal Citygate, prices fell from $1.91/MMBtu last week to $1.87/MMBtu yesterday.

Northeast prices decline. Prices in the Boston area declined substantially this week on warmer temperatures. At the Algonquin Citygate, which serves Boston, prices fell from $4.18/MMBtu at the beginning of the report week to $1.70/MMBtu yesterday. At Transcontinental Pipeline’s Zone 6 trading point serving New York City, prices began the week at $2.12/MMBtu, and ended the week at $1.78/MMBtu. Transco’s Zone 6 non-New York trading point, which serves Pennsylvania and New Jersey consumers, began the report week at $2.03/MMBtu and settled yesterday at $1.74/MMBtu.

Marcellus prices fall. At Dominion South in northwest Pennsylvania, prices began at $1.53/MMBtu last Wednesday and ended the report week at $1.36/MMBtu yesterday. On Transco's Leidy Line in northern Pennsylvania, prices remained flat, beginning and ending the report week at $1.32/MMBtu.

Nymex prices fall. The price of the Nymex March 2016 contract fell this week from $1.942/MMBtu last Wednesday to $1.778/MMBtu yesterday. The price of the 12-month strip (the 12 contracts between March 2016 and February 2017) fell from $2.299/MMBtu last Wednesday to $2.144/MMBtu yesterday. Earlier today, on the final day of trading for the March contract, the price settled at $1.711.

Production falls slightly. Dry natural gas production fell 0.2% from the previous week, but remained 2.9% greater than the same time last year. U.S. imports of natural gas from Canada declined by 24.4%. Pipeline imports to the Northeast, Midwest, and West all declined substantially. LNG sendout also declined from the previous week.

Consumption declines. Warmer-than-normal weather led to a 19.7% decline in U.S. consumption. The large decline was driven by a 34.0% decrease in residential/commercial consumption, but consumption declined in all sectors. Consumption of natural gas for electric power generation fell by 5.9%, and industrial consumption fell by 7.1%. U.S. exports of natural gas to Mexico fell by 1.2%, but were 38.5% greater than the same week a year ago.

more price data

Storage

Net withdrawals are below the five-year average and last year’s withdrawals. The net withdrawal from storage for the week ending Friday, February 19, was 117 Bcf, compared with the five-year average net withdrawal of 144 Bcf and last year’s pull of 205 Bcf for the same week.

Storage withdrawals fell below the range of analysts’ expectations. Expectations for net withdrawals for the report week generally ranged between 126 and 163 Bcf, averaging 140 Bcf. Immediately after the release of the EIA Weekly Natural Gas Storage Report (WNGSR), prices on the Nymex for the futures contract for April delivery at the Henry Hub fell 3¢/MMBtu, to $1.76/MMBtu, with 1,948 contracts traded. Trading on the Nymex for the March futures contract, which is due to expire this afternoon, was relatively light.

Working gas stocks appear poised to finish the heating season near record high. If withdrawals from storage follow the five-year average for the remainder of the heating season, working gas stocks will total 2,186 Bcf on March 31, the traditional end of the heating season. This would mark only the second time that working gas stocks finished the heating season above the 2,000-Bcf threshold. The previous high for the end of the heating season occurred in 2012, when working gas stocks totaled 2,473 Bcf on March 31, 2012.

Temperatures during the report week are lower than normal. Temperatures in the Lower 48 states averaged 36°F during the storage week, 1°F below the normal temperature for the week, but 7°F higher than last year at this time. This is only the third report week since the beginning of the 2015-16 heating season that temperatures were below normal levels. Cumulative heating degree-days since November 1, 2015, remain 13% below normal.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
18-Feb
Fri,
19-Feb
Mon,
22-Feb
Tue,
23-Feb
Wed,
24-Feb
Henry Hub
1.87
1.81
1.84
1.83
1.79
New York
1.97
1.74
1.83
1.71
1.78
Chicago
1.92
1.88
1.85
1.86
1.80
Cal. Comp. Avg,*
1.79
1.74
1.78
1.79
1.76
Futures ($/MMBtu)
March contract
1.778
1.782
1.821
1.804
1.852
April contract
1.834
1.829
1.862
1.867
1.927
*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: (2/17/16 - 2/24/16)
Percent change for week compared with:
 
last year
last week
Gross production
2.92%
-0.20%
Dry production
2.90%
-0.20%
Canadian imports
-16.64%
-24.45%
      West (net)
7.68%
-4.71%
      Midwest (net)
6.40%
-25.35%
      Northeast (net)
-76.34%
-69.52%
LNG imports
-55.68%
-70.65%
Total supply
0.71%
-3.36%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (2/17/16 - 2/24/16)
Percent change for week compared with:
 
last year
last week
U.S. consumption
-28.7%
-20.3%
Power
-4.8%
-5.9%
Industrial
-11.0%
-7.1%
Residential/commercial
-46.0%
-34.0%
Total demand
-27.3%
-19.7%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, February 19, 2016
Change from
 
last week
last year
Oil rigs
413
-5.92%
-59.47%
Natural gas rigs
101
-0.98%
-65.05%
Miscellaneous
0
0.00%
-100.00%
Rig numbers by type
Fri, February 19, 2016
Change from
 
last week
last year
Vertical
50
-15.25%
-75.37%
Horizontal
416
-3.93%
-57.51%
Directional
48
-2.04%
-62.50%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2016-02-19
2016-02-12
change
East
512
568
-56
Midwest
645
689
-44
Mountain
147
147
0
Pacific
256
255
1
South Central
1,024
1,042
-18
Total
2,584
2,701
-117
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(2/19/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
409
25.2
434
18.0
West
447
44.3
484
33.3
Producing
128
14.8
133
10.5
Total
1,969
31.2
2,007
28.7
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Feb 18)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
316
-23
-49
0
0
0
Middle Atlantic
302
-4
-53
0
0
0
E N Central
313
-39
-67
0
0
0
W N Central
267
-79
-81
0
0
0
South Atlantic
203
23
-41
0
0
0
E S Central
183
22
-66
0
0
0
W S Central
64
-3
-59
0
0
0
Mountain
129
-36
-25
0
0
0
Pacific
45
-40
5
0
0
0
United States
206
-10
-46
0
0
0
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Feb 18, 2016

Mean Temperature (F) 7-Day Mean ending Feb 18, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Feb 18, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 18, 2016

Source: NOAA/National Weather Service