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Natural Gas Weekly Update

for week ending October 26, 2016   |  Release date:  October 27, 2016   |  Next release:  November 3, 2016   |   Previous weeks

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

In the News:

Containerized LNG broadens reach of natural gas to off-grid customers

Earlier this month, NuBlu Energy started construction on the first of three trains of a small-scale (90,000 gallons per day) liquefied natural gas (LNG) plant along the Mississippi River in Port Allen, Louisiana. This project is designed to serve the domestic natural gas off-grid market – natural gas consumers not connected to the natural gas pipeline grid.

For many remote markets across the United States, including Hawaii and parts of Alaska, LNG is becoming a more viable option for potential off-grid consumers currently using other fuels. Although waterborne trade in LNG via large ocean-going vessels has been a fixture of the global gas market since 1959, more recently there has also been an expanding demand for moving LNG to low-volume markets, including LNG for marine engine refueling, power generation, the containerized market, and for oil and natural gas production.

Increasingly, LNG is being transported to customers in International Organization of Standardization (ISO) containers, which provide a flexible means of delivery, particularly to off-grid customers. Examples of this include the recent delivery of containerized LNG to Hawaii, and similar projects serving the Caribbean basin's power generation markets.

Unlike the delivery of LNG by tanker, which requires open-water access and large on-shore infrastructure, or by truck, which requires dedicated vehicles or fleets capable of carrying LNG, ISO containers can utilize existing inter-modal infrastructure. The 40–foot by 8–foot by 8–foot containers fit on any rail car, truck trailer, or container ship capable of carrying standard shipping containers. Each container can store up to 10,000 gallons, which is the gaseous equivalent of 830 thousand cubic feet (Mcf), the average annual consumption of 13 American households according to EIA's 2009 Residential Energy Consumption Survey.

ISO containers are capable of storing LNG in cryogenic state for up to 75 days, providing enough time for the cargo to reach its destinations and to serve as a viable means of storage. With a portable vaporizer, which can typically re-gasify 90 Mcf per hour, the LNG can be delivered as pipeline-quality natural gas to consumers.

Overview:

(For the Week Ending Wednesday, October 26, 2016)

  • Natural gas spot price movements were mixed this report week (Wednesday, October 19 to Wednesday, October 26). The Henry Hub spot price fell from $3.14 per million British thermal units (MMBtu) last Wednesday to $2.68/MMBtu yesterday.
  • Net injections to working gas storage totaled 73 billion cubic feet (Bcf) for the week ending October 21. Working natural gas stocks are 3,909 Bcf, which is 1% greater than the year-ago level and 5% greater than the five-year (2011–15) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 3¢, closing at $6.23/MMBtu for the week ending October 21. The prices of ethane and isobutane both fell by 1%. The prices of propane and butane rose by 1% and 4%, respectively. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, the natural gas rig count increased by 3 to 108 for the week ending Friday, October 21. The number of oil-directed rigs rose by 11 to 443. The total rig count climbed by 14, and it now stands at 553.

more summary data

Prices/Supply/Demand:

Spot price movements are mixed. This report week (Wednesday, October 19 to Wednesday, October 26), the Henry Hub spot price fell 46¢ from $3.14/MMBtu last Wednesday to $2.68/MMBtu yesterday. Many other price points featured similar movements. At the Chicago Citygate, prices decreased 36¢ to $2.82/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 18¢, down to $3.07/MMBtu yesterday. The price at SoCal Citygate decreased 43¢ to $2.84/MMBtu yesterday. These price declines occurred despite falling temperatures across most of the country, which increased home-heating demand.

Northeast prices rise. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 44¢ from $2.84/MMBtu last Wednesday to $3.28/MMBtu yesterday. Temperatures fell sharply early this week, coming off of relatively mild weather late last week. Accordingly, Algonquin prices for the period dipped as low as $1.58/MMBtu last Thursday, and reached as high as $3.78/MMBtu on Monday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 54¢ from $1.03/MMBtu last Wednesday to $1.57/MMBtu yesterday.

Marcellus prices rise above $1.00/MMBtu. Tennessee Zone 4 Marcellus spot prices increased 32¢ from $0.88/MMBtu last Wednesday to $1.20/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 29¢ from $0.97/MMBtu last Wednesday to $1.26/MMBtu yesterday. Similar to price points in the Northeast, Marcellus prices generally reached a low for the report period last Thursday, and a high on Monday or Tuesday, tracking the colder weather for this week.

November futures down. At the Nymex, the price of the November 2016 contract decreased 44¢, from $3.170/MMBtu last Wednesday to $2.731/MMBtu yesterday. The price of the 12–month strip averaging November 2016 through October 2017 futures contracts declined 32¢ to $3.045/MMBtu.

Supply is up. According to data from PointLogic, the average total supply of natural gas rose by 2% compared with the previous week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada increased by 24% from last week, with the restoration of the Alliance Pipeline to service on October 20. The pipeline, which imports unprocessed gas across the Canada-North Dakota border and sends it to Illinois to be processed, was taken out of service for maintenance on October 12.

Demand is up with colder temperatures. Total U.S. consumption of natural gas rose by 5% compared with the previous report week, according to data from PointLogic. Power burn declined by 9% week over week. Industrial sector consumption increased by 4% week over week. In the residential and commercial sectors, which dominate the market for natural gas used for heating, consumption increased by 38%. Natural gas exports to Mexico were the same as last week, averaging 3.3 Bcf/d.

U.S. liquefied natural gas (LNG) exports. The Sabine Pass liquefaction terminal resumed operations of Trains 1 and 2 after the completion of four–weeks of planned maintenance. Pipeline deliveries to the terminal averaged 0.2 Bcf/d during the report week. There have been no LNG exports from the facility since October 9.

Kinder Morgan announced that it will begin construction on the Elba Island LNG Export Project, located near Savannah, Georgia, on November 1.

more price data

Storage:

Injections into storage remain below historical norms. Net injections into storage totaled 73 Bcf, compared with the five-year (2011–15) average net injection of 76 Bcf and last year's net injections of 67 Bcf during the same week. The weekly net injection to storage has fallen below the five-year average for 25 straight weeks. However, this week's report marks the smallest weekly deficit to the five-year average net injection since April 2016. Although weekly net injections continue to lag behind the five-year average pace, recent injection activity has increased significantly from earlier in the refill season. Weekly net injections so far during the 2016 refill season averaged 48 Bcf per week, while over the past four weeks, the weekly net build averaged 77 Bcf. Working gas stocks for this week total 3,909 Bcf, which is 182 Bcf more than the five-year average and 52 Bcf more than last year at this time.

Working gas stocks remain poised to end the 2016 refill season at near record levels. If net injections match the five-year average for the remainder of the refill season, working gas stocks will total 3,988 Bcf on October 31. This storage level exceeds the all-time end of refill season high of 3,929 Bcf in 2012. In 2015, working gas stocks totaled 3,926 Bcf at the end of October, before reaching the highest reported level ever of 4,009 Bcf on November 20, 2015. The October Short-Term Energy Outlook forecasts working gas reaching 3,933 Bcf at the end of October.

South Central region continues to narrow deficit to last year. Net injections totaled 34 Bcf in the South Central region, with salt dome facilities accounting for net injections of 22 Bcf. For the second week in a row, working gas levels in the region drew closer to last year's level. Working gas stocks in the South Central region are 8% higher than the five-year average for this time of the year, and working gas stocks at salt dome facilities in the region are 3% below last year at this time.

Net injections are neutral to market expectations. Estimates of net injections into storage ranged from 65 Bcf to 79 Bcf, with a median of 74 Bcf. The reaction on the Nymex was relatively modest. The price of the Nymex futures contract for November delivery at the Henry Hub varied within 1¢/MMBtu of $2.73 with light trading at the release of EIA's Weekly Natural Gas Storage Report (WNGSR). The November contract is due to expire in trading this afternoon. The December contract had considerably more trading activity following the WNGSR release. The price of the December contract varied in a 2¢/MMBtu band, trading at $3.05/MMBtu within two minutes of the release.

Spread to the January futures price remains close to year-ago levels. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.15/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.60/MMBtu, a difference of 46¢. The premium was 39¢ a year ago.

Temperatures were warmer than last week, and they remain higher than normal. Temperatures in the Lower 48 states averaged 65°F during the storage week, 9°F higher than the normal and 9°F higher than last year at this time. Cooling degree days (CDD) in the Lower 48 states totaled 31, compared to 12 last year and compared to a normal of 11.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
20-Oct
Fri,
21-Oct
Mon,
24-Oct
Tue,
25-Oct
Wed,
26-Oct
Henry Hub
3.09
2.87
2.75
2.67
2.68
New York
0.94
1.30
2.10
1.85
1.57
Chicago
3.07
2.83
2.79
2.78
2.82
Cal. Comp. Avg.*
3.06
2.85
2.84
2.77
2.78
Futures ($/MMBtu)
November contract
3.141
2.993
2.831
2.774
2.731
December contract
3.434
3.361
3.319
3.149
3.036
*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: (10/20/16 - 10/26/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.0
78.5
81.4
Dry production
71.0
70.6
73.3
Net Canada imports
6.3
5.1
5.6
LNG pipeline deliveries
0.2
0.3
0.2
Total supply
77.5
75.9
79.1

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: (10/20/16 - 10/26/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
59.1
56.5
60.6
    Power
23.2
25.6
25.0
    Industrial
20.4
19.6
20.3
    Residential/commercial
15.5
11.2
15.4
Mexico exports
3.3
3.3
3.1
Pipeline fuel use/losses
6.5
6.2
6.6
LNG pipeline receipts
0.3
0.0
0.0
Total demand
69.1
66.0
70.3

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, October 21, 2016
Change from
 
last week
last year
Oil rigs
443
2.5%
-25.4%
Natural gas rigs
108
2.9%
-44.0%
Miscellaneous
2
0.0%
0.0%
Rig numbers by type
Fri, October 21, 2016
Change from
 
last week
last year
Vertical
57
0.0%
-47.7%
Horizontal
445
3.2%
-24.7%
Directional
51
0.0%
-41.4%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-10-21
2016-10-14
change
East
939
925
14
Midwest
1,115
1,093
22
Mountain
245
243
2
Pacific
326
325
1
South Central
1,284
1,250
34
Total
3,909
3,836
73
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(10/21/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
903
4.0
913
2.8
Midwest
1,065
4.7
1,062
5.0
Mountain
215
14.0
207
18.4
Pacific
371
-12.1
360
-9.4
South Central
1,303
-1.5
1,185
8.4
Total
3,857
1.3
3,727
4.9
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Oct 20)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
37
-68
-91
8
8
8
Middle Atlantic
29
-64
-84
13
12
13
E N Central
35
-64
-67
15
14
15
W N Central
53
-43
-28
14
12
12
South Atlantic
6
-45
-71
57
32
35
E S Central
3
-47
-63
54
44
52
W S Central
2
-18
-10
85
58
46
Mountain
59
-34
3
16
5
-1
Pacific
24
-12
14
2
-5
-9
United States
28
-44
-42
31
20
19
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Oct 20, 2016

Mean Temperature (F) 7-Day Mean ending Oct 20, 2016

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Oct 20, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Oct 20, 2016

Source: NOAA National Weather Service