Natural Gas

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Natural Gas Weekly Update

for week ending September 14, 2016   |  Release date:  September 15, 2016   |  Next release:  September 22, 2016   |   Previous weeks

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

In the News:

Recent mergers change the landscape of natural gas pipeline ownership

On September 6, Enbridge Inc. announced its purchase of Spectra Energy Corp. Enbridge currently operates 1,800 miles of large-diameter (24 inches or greater) natural gas pipelines in the United States. Before its acquisition of Spectra Energy, Enbridge was the 15th-largest holder of large-diameter U.S. natural gas pipeline miles (including co-owned pipeline), and Spectra ranked fourth in the nation with nearly 9,800 miles. Their newly combined pipeline holdings are still the fourth-largest overall.

Nearly 82% of large-diameter pipeline miles and 62% of all pipeline miles in the United States are owned by 10 companies. Kinder Morgan Inc., with 32,000 miles of large-diameter pipeline, has more than double the mileage of TransCanada Corporation, which acquired Columbia Pipeline Group in July 2015. The merger of Energy Transfer Equity LP (third-largest holder) and Williams Companies, Inc. (fifth-largest holder) that was recently canceled would have resulted in a large natural gas pipeline conglomerate ranked second to Kinder Morgan, which owns about 19% of all U.S. pipeline.

Most of the top-10 companies, which includes some large regional players, are common carrier pipelines regulated by the Federal Energy Regulatory Commission (FERC). The top five companies have national or international scale operations.

Overview:

(For the Week Ending Wednesday, September 14, 2016)

  • Natural gas spot prices were mixed this report week (Wednesday, September 7 to Wednesday, September 14). The Henry Hub spot price rose from $2.82/million British thermal units (MMBtu) last Wednesday to $3.04/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the October 2016 contract rose 21¢, from $2.676/MMBtu last Wednesday to $2.889/MMBtu yesterday.
  • Net injections to working gas totaled 62 billion cubic feet (Bcf) for the week ending September 9. Working gas stocks are 3,499 Bcf, which is 6% more than the year-ago level and 9% more than the five-year (2011—15) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 14¢, closing at $4.83/MMBtu for the week ending September 9. The price of natural gasoline and ethane rose by 3%, butane and isobutane rose by 4%, and propane rose by 2%.
  • According to Baker Hughes, for the week ending Friday, September 9, the natural gas rig count increased by 4 to 92. The number of oil-directed rigs rose by 7 to 414. The total rig count climbed by 11, and now stands at 508.

more summary data

Prices/Supply/Demand:

Prices rise outside the Northeast. This report week (Wednesday, September 7 to Wednesday, September 14), the Henry Hub spot price rose 22¢ from $2.82/MMBtu last Wednesday to $3.04/MMBtu yesterday. At the Chicago Citygate, prices increased 11¢ from $2.81/MMBtu last Wednesday to $2.92/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 18¢, going from $3.24/MMBtu last Wednesday to $3.42/MMBtu yesterday.

Northeast prices fall with power burn. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 60¢ from $3.66/MMBtu last Wednesday to $3.06/MMBtu yesterday. At the Transcontinental Pipeline’s Zone 6 trading point for New York, prices decreased $1.48 from $2.83/MMBtu last Wednesday to $1.35/MMBtu yesterday. These significant drops coincided with lower regional power burn as temperatures moderated.

Tennessee Zone 4 Marcellus spot prices declined 10¢ from $1.31/MMBtu last Wednesday to $1.21/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 17¢ from $1.37/MMBtu last Wednesday to $1.20/MMBtu yesterday.

Nymex prices rise. At the Nymex, the price of the October 2016 contract increased 21¢ from $2.676/MMBtu last Wednesday to $2.889/MMBtu yesterday. The price of the 12-month strip averaging October 2016 through September 2017 futures contracts climbed 11¢ to $3.094/MMBtu.

Average supply flat. According to data from PointLogic, total supply of natural gas remained the same as last week, averaging 78.6 Bcf/d. Although the average supply remained constant, daily supply varied by more than 2 Bcf/d during the week, from a high of 79.6 Bcf last Thursday to 77.4 Bcf yesterday. Average dry production remained constant week over week. Average net imports from Canada increased by 11% from last week.

Consumption up. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from PointLogic. Power burn climbed by 6% week over week, driven by higher demand in the Midcontinent. Industrial sector consumption stayed constant, averaging 19.5 Bcf/d. Natural gas exports to Mexico went up 2%.

U.S. liquefied natural gas (LNG) exports remain flat. Natural gas pipeline flows to the Sabine Pass liquefaction terminal averaged 1.2 Bcf/d, unchanged from last week. Two vessels (combined LNG-carrying capacity 6.2 Bcf) departed the terminal—one on September 9 and one on September 11.

more price data

Storage:

Injections to storage continue at slower-than-normal rate. Net injections into storage totaled 62 Bcf, compared with the five-year (2011—15) average net injection of 69 Bcf and last year’s net injections of 74 Bcf during the same week. Working gas stocks total 3,499 Bcf, 299 Bcf above the five-year average and 184 Bcf above last year at this time. When the refill season began on April 1, working gas stocks were 874 Bcf above the five-year average.

South Central region switches to net injections this week on mild weather. Net injections totaled 9 Bcf in the South Central region, with salt dome facilities accounting for net injections of 5 Bcf. This week is the first week of net injections after eight straight weeks of net withdrawals in the region. Throughout the summer, storage withdrawals in the region have occurred more frequently and at larger volumes than ever before. So far in the refill season (April 1—October 31), the South Central salt region has had a cumulative net withdrawal of 38 Bcf, while the non-salt region has had a cumulative net injection of 123 Bcf. This withdrawal rate compares with the five-year average net injections of 72 Bcf in salt facilities and 277 Bcf in nonsalt facilities over this same time period. Working gas stocks in the South Central region remain 16% above the five-year average for this time of year.

Net injections within range of market expectations. Estimates of net injections into storage ranged from 45 Bcf to 72 Bcf, with a median of 65 Bcf. As a result, the price of the Nymex contract for October delivery at the Henry Hub rose 2¢ to $2.86/MMBtu, immediately following 633 trades at the release of the Weekly Natural Gas Storage Report. The price moved up a few more cents in the following minutes, stabilizing at around $2.88/MMBtu.

Spread to the January futures price declines over the week. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.83/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.21/MMBtu, a difference of 38¢. A year ago, the premium was 32¢/MMBtu.

Temperatures fall relative to last week, remain higher than normal. Temperatures in the Lower 48 states averaged 74°F, 4°F higher than the normal and 2°F lower than last year at this time. Cooling degree-days (CDD) in the Lower 48 states totaled 64, compared with 79 last year and a normal of 47.

more storage data

See also:

Large-diameter U.S. pipeline ownership


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
08-Sep
Fri,
09-Sep
Mon,
12-Sep
Tue,
13-Sep
Wed,
14-Sep
Henry Hub
2.84
2.92
2.99
3.06
3.04
New York
2.70
1.57
1.38
1.63
1.35
Chicago
2.81
2.84
2.92
2.92
2.92
Cal. Comp. Avg.*
2.87
2.87
2.97
3.04
3.05
Futures ($/MMBtu)
October contract
2.806
2.797
2.915
2.909
2.889
November contract
2.917
2.890
2.986
2.989
2.969
*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: (9/8/16 - 9/14/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
80.6
80.9
81.9
Dry production
72.5
72.8
73.6
Net Canada imports
5.9
5.3
5.4
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
78.6
78.3
79.3

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (9/8/16 - 9/14/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
59.7
57.2
59.4
    Power
32.5
30.6
29.8
    Industrial
19.5
19.5
19.9
    Residential/commercial
7.7
7.2
9.7
Mexico exports
3.6
3.5
3.4
Pipeline fuel use/losses
6.6
6.4
6.6
LNG pipeline receipts
1.2
1.2
0.0
Total demand
71.1
68.3
69.3

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, September 09, 2016
Change from
 
last week
last year
Oil rigs
414
1.7%
-36.5%
Natural gas rigs
92
4.5%
-53.1%
Miscellaneous
2
0.0%
0.0%
Rig numbers by type
Fri, September 09, 2016
Change from
 
last week
last year
Vertical
64
6.7%
-46.2%
Horizontal
396
0.3%
-38.9%
Directional
48
14.3%
-40.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-09-09
2016-09-02
change
East
832
812
20
Midwest
954
928
26
Mountain
227
224
3
Pacific
317
313
4
South Central
1,169
1,160
9
Total
3,499
3,437
62
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(9/9/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
782
6.4
789
5.4
Midwest
873
9.3
885
7.8
Mountain
193
17.6
185
22.7
Pacific
348
-8.9
332
-4.5
South Central
1,119
4.5
1,008
16.0
Total
3,315
5.6
3,200
9.3
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Sep 08)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
1
-12
-1
37
26
-14
Middle Atlantic
1
-7
1
49
25
-24
E N Central
3
-10
2
55
32
-24
W N Central
4
-14
1
51
18
-29
South Atlantic
0
-1
0
91
18
-6
E S Central
0
-1
0
92
27
-5
W S Central
0
-1
0
116
17
-11
Mountain
6
-16
-4
59
9
6
Pacific
5
-3
-2
26
-10
-16
United States
2
-7
0
64
17
-15
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Sep 08, 2016

Mean Temperature (F) 7-Day Mean ending Sep 08, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Sep 08, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Sep 08, 2016

Source: NOAA/National Weather Service