In the News:
Natural gas expected to exceed coal in power generation in 2016
Historically, coal has been the dominant fuel for electricity generation in the United States. Over the past several years, the combination of relatively low natural gas prices, increases in gas-fired generation capacity, and coal power generator retirements have led to increases in gas-fired power generation. EIA forecasts natural gas will overtake coal as the primary source of generation in 2016.
The March 2016 Short-Term Energy Outlook forecasts natural gas-fired power generation to make up 33.3% of total generation in 2016, compared with coal-fired power generation at 32.0%. EIA forecasts gas generation will increase in 2016, hitting a record, as prices are expected to fall year over year in 2016, then rise slightly the following year. In 2017, gas- and coal-fired generation are equal, each making up an expected 32.3% of total generation.
For the first part of 2016, preliminary data indicate natural gas generation has significantly exceeded seasonal norms. According to Bentek Energy data, natural gas consumed for power generation averaged 24.8 billion cubic feet per day (Bcf/d) from January 1 – March 24, 2016, 22.4% greater than the five-year (2011–15) average of the same time period. Over this time period, Henry Hub spot prices have remained relatively low, because of strong domestic production and a warmer-than-normal winter.
In April 2012, when Henry Hub spot prices averaged $1.82 per million British thermal unit (MMBtu), natural gas and coal-fired generation were equal for the first time. Three years later, in April 2015, natural gas generation exceeded coal generation for the first time on record.
Overview:
(For the Week Ending Wednesday, March 23, 2016)
- Natural gas spot prices increased slightly at most spot market locations this report week (Wednesday, March 16, to Wednesday, March 23). The Henry Hub spot price rose during the report week from $1.74/MMBtu to $1.80/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the near-month (April 2016) contract fell from $1.868/MMBtu last Wednesday to $1.794/MMBtu yesterday.
- Net injections to working gas storage totaled 15 billion cubic feet (Bcf) for the week ending March 18. Working gas stocks are 2,493 Bcf–68.9% above the year-ago level and 51.4% above the five-year (2011-15) average.
- For the week ending March 18, gas-directed rigs decreased by 5 to 89, and oil-directed rigs rose by 1 to 387. The total rig count fell by 4, and now stands at 476. The last time the oil rig count posted a weekly increase was the week ending December 18.
- The natural gas plant liquids (NGPL) composite price at Mont Belvieu, Texas, increased by 2¢ to $4.60/MMBtu for the week ending Friday, March 18. The prices of natural gasoline and ethane rose by 3.2% and 3.7%, respectively. The prices of isobutane, butane, and propane fell by 1.2%, 1.3%, and 1.4%, respectively.
Prices/Demand/Supply:
Prices increase slightly across much of the country. The national benchmark Henry Hub price increased from $1.74/MMBtu last Wednesday to $1.80/MMBtu yesterday, its second consecutive weekly increase. Most spot prices around the country also posted slight increases week over week. At the Chicago Citygate, prices rose from $1.87/MMBtu last Wednesday to $1.90/MMBtu yesterday.
Northeast prices are mixed during the week. Prices at most locations serving market areas in the Northeast, with the exception of Boston, rose slightly week over week. On Friday, March 18, both New York and Boston-area prices rose substantially heading into a cold weekend. At the Algonquin Citygate, which serves Boston, prices rose from $1.47/MMBtu last Wednesday, hit a weekly high at $3.10/MMBtu on Friday, then ended the week down 11¢ at $1.36/MMBtu yesterday. At Transcontinental Pipeline's Zone 6 trading point for New York City delivery, prices began the week at $1.18/MMBtu last Wednesday, rose to $1.96/MMBtu Friday, and ended the week at $1.26/MMBtu.
Marcellus prices increase slightly. At Dominion South in northwest Pennsylvania, prices began at $1.10/MMBtu last Wednesday and ended the week at $1.15/MMBtu yesterday. On Transco's Leidy Line in northern Pennsylvania, the price followed a similar pattern, rising from $1.08/MMBtu last Wednesday to $1.15/MMBtu yesterday.
Nymex prices fall. In contrast to spot prices, prices in the futures market fell in the report week. The April 2016 near-month contract fell from $1.868/MMBtu last Wednesday to $1.794/MMBtu yesterday. The price of the 12-month strip (the average price of the 12 contracts between April 2016 and March 2017) fell from $2.361/MMBtu last Wednesday to $2.318/MMBtu yesterday.
Supply increases. According to data from Bentek Energy, total supply rose by 1.4%, driven by a 0.4% increase in dry production. Pipeline imports from Canada rose 16.8% this week overall. Imports from Canada increased in the Midwest, remained mostly flat in the West, and declined in the Northeast.
Consumption increases. Overall consumption this week rose by 9.5%, driven by a 29.2% increase in residential and commercial consumption, which was likely the result of increased heating consumption. Industrial sector consumption rose 3.2%, consumption of natural gas for power generation fell 2.9%, and pipeline exports to Mexico fell 8.2%.
Storage:
Working gas stocks post first net injection of the season on a national level. Net injections to storage totaled 15 Bcf, compared with the five-year average withdrawal of 24 Bcf and last year's net withdrawal of 4 Bcf. Since January 22, the storage surplus relative to the five-year average has grown from 432 to 846 Bcf. Natural gas inventories are 1,017 Bcf higher than last year at this time. Cumulatively since January 1, net withdrawals from storage have fallen 24.9% below the five-year average, and 29.5% below last year at this time.
Working gas stocks are at record high levels for this time of year. If net withdrawals from storage follow the five-year average for the remainder of the heating season, working gas stocks will total 2,455 Bcf on March 31—the traditional end of the heating season. The previous high for the end of the heating season occurred in 2012, when working gas stocks totaled 2,473 on March 31, 2012. Working gas stocks totaled 2,372 Bcf at this time in 2012, before two back-to-back injections in March raised working gas levels during the last weeks of the heating season. Working gas stocks are currently 99 Bcf above the five-year maximum set in 2012.
Storage injections are on the low end of the range of expectations. All analysts called for injections this week, with forecasts generally ranging from 14 to 32 Bcf, with a median of 20 Bcf. At the release of the WNGSR, the Nymex natural gas futures contract for April delivery at the Henry Hub increased about 2¢/MMBtu, in relatively light trading. The April contract is due to expire in trading this week on March 29.
Temperatures were higher than normal during the storage week. Temperatures in the Lower 48 states averaged 54.1°F, 20% higher than normal, and 6% above last year at this time. These above-normal temperatures are a continuation of an ongoing pattern that has occurred since the beginning of the 2015-16 heating season on November 1, 2015. Temperatures have been above normal levels during 17 out of 20 weeks in the 2015-16 heating season so far. Cumulative heating degree-days during this period are 17% below normal.
See also:
Spot Prices ($/MMBtu) | Thu, 17-Mar |
Fri, 18-Mar |
Mon, 21-Mar |
Tue, 22-Mar |
Wed, 23-Mar |
---|---|---|---|---|---|
Henry Hub |
1.82 |
1.84 |
1.76 |
1.75 |
1.80 |
New York |
1.47 |
1.96 |
1.28 |
1.24 |
1.26 |
Chicago |
1.91 |
1.95 |
1.92 |
1.88 |
1.90 |
Cal. Comp. Avg,* |
1.77 |
1.81 |
1.77 |
1.78 |
1.78 |
Futures ($/MMBtu) | |||||
April contract |
1.936 |
1.907 |
1.828 |
1.863 |
1.794 |
May contract |
2.011 |
1.989 |
1.904 |
1.937 |
1.868 |
*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: (3/16/16 - 3/23/16) | ||
---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
Gross production | -0.42%
|
0.39%
|
Dry production | -0.42%
|
0.38%
|
Canadian imports | -9.39%
|
16.80%
|
West (net) | 8.19%
|
0.20%
|
Midwest (net) | 42.70%
|
9.22%
|
Northeast (net) | -92.13%
|
-123.00%
|
LNG imports | 36.54%
|
25.26%
|
Total supply | -0.96%
|
1.35%
|
Source: BENTEK Energy LLC |
U.S. consumption - Gas Week: (3/16/16 - 3/23/16) | ||
---|---|---|
Percent change for week compared with: |
||
last year |
last week |
|
U.S. consumption | -4.4%
|
9.5%
|
Power | 6.2%
|
-2.9%
|
Industrial | -0.1%
|
3.2%
|
Residential/commercial | -15.5%
|
29.2%
|
Total demand | -3.3%
|
8.7%
|
Source: BENTEK Energy LLC |
Rigs | |||
---|---|---|---|
Fri, March 18, 2016 |
Change from |
||
last week |
last year |
||
Oil rigs | 387 |
0.26% |
-53.09% |
Natural gas rigs | 89 |
-5.32% |
-63.22% |
Miscellaneous | 0 |
0.00% |
-100.00% |
Rig numbers by type | |||
---|---|---|---|
Fri, March 18, 2016 |
Change from |
||
last week |
last year |
||
Vertical | 58 |
5.45% |
-60.81% |
Horizontal | 369 |
-1.60% |
-55.49% |
Directional | 49 |
-2.00% |
-46.74% |
Source: Baker Hughes Inc. |
Working gas in underground storage | ||||
---|---|---|---|---|
Stocks billion cubic feet (bcf) |
||||
Region | 2016-03-18 |
2016-03-11 |
change |
|
East | 453 |
452 |
1 |
|
Midwest | 571 |
577 |
-6 |
|
Mountain | 148 |
147 |
1 |
|
Pacific | 260 |
259 |
1 |
|
South Central | 1,061 |
1,043 |
18 |
|
Total | 2,493 |
2,478 |
15 |
|
Source: U.S. Energy Information Administration |
Working gas in underground storage | |||||
---|---|---|---|---|---|
Historical comparisons |
|||||
Year ago (3/18/15) |
5-year average (2011-2015) |
||||
Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
East | 279 |
62.4 |
323 |
40.2 |
|
Midwest | 281 |
103.2 |
355 |
60.8 |
|
Mountain | 112 |
32.1 |
115 |
28.7 |
|
Pacific | 263 |
-1.1 |
202 |
28.7 |
|
South Central | 541 |
96.1 |
652 |
62.7 |
|
Total | 1,476 |
68.9 |
1,647 |
51.4 |
|
Source: U.S. Energy Information Administration |
Temperature -- heating & cooling degree days (week ending Mar 17) | ||||||||
---|---|---|---|---|---|---|---|---|
HDD deviation from: |
CDD deviation from: |
|||||||
Region | HDD Current |
normal |
last year |
CDD Current |
normal |
last year |
||
New England | 126
|
-80
|
-93
|
0
|
0
|
0
|
||
Middle Atlantic | 109
|
-82
|
-79
|
0
|
0
|
0
|
||
E N Central | 109
|
-92
|
-39
|
0
|
0
|
0
|
||
W N Central | 107
|
-93
|
-8
|
0
|
-1
|
0
|
||
South Atlantic | 34
|
-79
|
-45
|
29
|
18
|
7
|
||
E S Central | 27
|
-80
|
-32
|
9
|
4
|
8
|
||
W S Central | 23
|
-42
|
-16
|
26
|
15
|
14
|
||
Mountain | 124
|
-36
|
38
|
3
|
2
|
-5
|
||
Pacific | 78
|
-13
|
57
|
0
|
-1
|
-5
|
||
United States | 85
|
-66
|
-20
|
9
|
5
|
2
|
||
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration |
Average temperature (°F)
7-Day Mean ending Mar 17, 2016
Source: NOAA/National Weather Service
Deviation between average and normal (°F)
7-Day Mean ending Mar 17, 2016
Source: NOAA/National Weather Service