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Natural Gas Weekly Update

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


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

In the News:

Tennessee Gas Pipeline will abandon one of four natural gas lines, repurposing to southbound liquids transport

On December 2, the Federal Energy Regulatory Commission's (FERC) 30-day public comment period concluded on Kinder Morgan affiliate Tennessee Gas Pipeline's (TGP) proposal to abandon natural gas service on one of their four lines that runs from the U.S. Gulf Coast to the Northeast and replace it with expansion in capacity on the remaining three lines. FERC has set January 31, 2017 as the Federal Authorization Decision Deadline to issue the final order. Current northbound natural gas flows on TGP have fallen as production in the Northeast has grown, with some segments now moving natural gas both north and south.

Once TGP receives the final order and completes work approved in the order, the company intends to sell the abandoned 964-mile pipeline to another Kinder Morgan affiliate, Utica Marcellus Texas Pipeline (UMTP), which intends to upgrade and convert the line to carry natural gas plant liquids (NGPL) south from the Marcellus/Utica production region to the Gulf Coast. UMTP plans to construct approximately 200 miles of new pipe to reach the Mont Belvieu hub and to build at least three new lateral pipelines in the Northeast to connect to natural gas processing plants and fractionators.

While some NGPL pipelines currently serve the Northeast, capacity has been insufficient to move the growing volumes of production. Only one pipeline that is currently in service is capable of moving NGPL south to the Gulf Coast, where most U.S. storage facilities,export terminals, and petrochemical plants are located. Currently, producers of NGPL in the Northeast have not been recovering significant quantities of ethane, but leaving it in the natural gas stream (i.e., "ethane rejection"). Outside of seasonal demand, they have been shipping propane and butanes out of the region, primarily by rail.

The converted and upgraded UMTP will be capable of carrying up to 430,000 barrels per day of NGPL. As currently proposed, the pipeline would be able to move ethane-propane mix, propane, butanes, natural gasoline, and condensate, as well as Y-grade (raw NGPL mix—potentially including ethane) in batches. The final capacity and products to be transported, however, will only be finalized once the company holds an additional Open Season—when a pipeline company seeks commitments from shippers to move product on the pipeline along a defined path and at a predetermined price.

Overview:

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

  • Natural gas spot prices fell at most locations this report week (Wednesday, December 7 to Wednesday, December 14). The Henry Hub spot price fell from $3.76 per million British thermal units (MMBtu) last Wednesday to $3.52/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the January 2017 contract price fell 6¢ from $3.603/MMBtu last Wednesday to $3.540/MMBtu yesterday.
  • Net withdrawals from working gas totaled 147 billion cubic feet (Bcf) for the week ending December 9. Working natural gas stocks are 3,806 Bcf, which is 1% less 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 66¢, closing at $6.72/MMBtu for the week ending December 9. The prices of natural gasoline, ethane, propane, butane, and isobutane all rose, increasing by 5%, 15%, 10%, 12%, and 15%, respectively. These increases may be related to recent strength in crude oil prices.
  • According to Baker Hughes, for the week ending Friday, December 9, the natural gas rig count increased by 6 to 125. The number of oil-directed rigs rose by 21 to 498. The total rig count climbed by 27, and it now stands at 624. Both WTI and Brent Crude spot prices averaged above $50/barrel (b) for this period, compared with the $30-$40/b-range about this time last year. Higher oil prices may be driving increased drilling.

more summary data

Prices/Supply/Demand:

Prices fall at most locations outside the Northeast. This report week (Wednesday, December 7 to Wednesday, December 14), the Henry Hub spot price fell 24¢, from $3.76/MMBtu last Wednesday to $3.52/MMBtu yesterday. On average this report week, the weather was much colder than last report week, but the last report period ended on a very cold day with elevated prices. Prices generally remained elevated this report period, but fell a bit on Monday.

Early this report week, temperatures fell across the Midwest and Rockies because of polar vortex weather. Low temperatures in the Midwest corresponded to the start of expanded east-to-west capacity on the Tallgrass REX Pipeline. NGI reports that westbound volumes on the REX were about 200 MMcf/d higher this week because of REX's Zone 3 expansion. The expansion project, when fully implemented, will increase REX's capacity by about 800 MMcf/d, bringing total capacity to 2.6 Bcf/d.

At the Chicago Citygate, prices decreased 7¢ from $3.85/MMBtu last Wednesday to $3.78/MMBtu yesterday. Prices at PG&E Citygate in Northern California decreased 14¢, down from $3.79/MMBtu last Wednesday to $3.65/MMBtu yesterday. The price at SoCal Citygate decreased 18¢ from $3.84/MMBtu last Wednesday to $3.66/MMBtu yesterday.

Northeast prices increase substantially. Despite recent pipeline capacity expansions for delivery into the Northeast, prices jumped significantly as a result of cold weather this report week. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $6.47 from $6.00/MMBtu last Wednesday to $12.47/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased $15.22 from $4.13/MMBtu last Wednesday to $19.35/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 42¢ from $3.30/MMBtu last Wednesday to $2.88/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 26¢ from $3.40/MMBtu last Wednesday to $3.14/MMBtu yesterday.

Nymex prices rise. At the Nymex, the price of the January 2017 contract decreased 6¢, from $3.603/MMBtu last Wednesday to $3.540/MMBtu yesterday. The price of the 12-month strip, averaging January 2017 through December 2017 futures contracts, climbed 3¢ to $3.468/MMBtu.

Supply essentially flat. According to data from PointLogic, the average total supply of natural gas rose by 1% compared with the previous week. Dry natural gas production remained flat week over week. Average net imports from Canada increased by 10% from last week, likely in response to cold winter weather.

Demand rises significantly again this week. Total U.S. consumption of natural gas rose by 10% compared with the previous report week, according to data from PointLogic. Power burn climbed by 8% week over week, and consumption in the residential and commercial sectors increased by 17%. Industrial sector consumption remained flat. Natural gas exports to Mexico decreased 6%.

U.S. liquefied natural gas (LNG) exports. The natural gas pipeline flows to Sabine Pass liquefaction terminal averaged 1.3 Bcf/d, 15% lower than flows last week. Train 1 has been shut down this week according to Bloomberg. The terminal's operator, Cheniere, plans to introduce natural gas to Train 3 and begin its commissioning in late February or March of next year. Two vessels (combined LNG-carrying capacity 7.1 Bcf) departed the terminal last week and one vessel is currently loading at the terminal.

more price data

Storage:

Working natural gas stocks post largest December net withdrawals since 2013. Net withdrawals from storage totaled 147 Bcf, compared with the five-year (2011–15) average net withdrawal of 79 Bcf and last year's net withdrawals of 46 Bcf during the same week. This reporting period is the first time since 2013 that withdrawals from working natural gas topped 100 Bcf in December. This week posted the third largest December withdrawal since 2010, behind pulls in 2013 of 285 Bcf and 177 Bcf on December 13 and 20, respectively. Working natural gas stocks total 3,806 Bcf, which is 186 Bcf more than the five-year average and 50 Bcf less than last year at this time. Working natural gas stocks fell below the five-year maximum for the first time since April 15, 2016.

Withdrawals from storage top five-year average in every region of the Lower 48 states. Across the country, net withdrawals from working natural gas storage exceeded the five-year average. The East and Midwest regions posted net natural gas withdrawals totaling 34 Bcf and 41 Bcf, which is above the respective five-year average net withdrawals of 18 and 29 Bcf, respectively. Working natural gas stocks in the East region are 4% below last year's level and 1% below the five-year level for this time of year. Working natural gas in the Midwest region matched the level reported last year at this time and remains 6% above the five-year average. The Mountain region remains well above historical levels, despite the more than doubling of the five-year average pull of 5 Bcf. The Pacific region posted a withdrawal of 11 Bcf during the report week, and working natural gas in that region remains 11% below its five-year average, in large part because of inventory restrictions on the Aliso Canyon facility.

Net withdrawals in the South Central region are more than double than the five-year average. Net withdrawals were the same as the five-year average and totaled 49 Bcf in the South Central region, with salt dome facilities accounting for net withdrawals of 15 Bcf, also equal to the five-year average. Working natural gas stocks in the South Central region are 10% higher than the five-year average for this time of year.

Net withdrawals exceed market expectations, and prices rise in heavy trading. According to the Bloomberg survey of natural gas analysts of December 4, 2016, estimates of net natural gas withdrawals from storage ranged from 114 Bcf to 140 Bcf, with a median of 124 Bcf. The price of the Nymex futures contract for January 2017 delivery at Henry Hub gained 6¢/MMBtu in 1,096 trades, climbing to $3.57/MMBtu, at the release of EIA's Weekly Natural Gas Storage Report (WNGSR). Prices continued their general upward trajectory in subsequent trading, averaging $3.58/ MMBtu within two minutes of the release of the WNGSR.

Temperatures drop on the week, and remain slightly warmer than normal. Temperatures in the Lower 48 states fell 7°F on the week and averaged 40°F. Temperatures were considerably warmer than normal last week. Falling temperatures this week brought temperatures within 1°F of the normal level for this time of year and 4°F lower than last year at this time. Heating degree days (HDD) in the Lower 48 states totaled 179, compared with 147 last year and a normal of 181.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
08-Dec
Fri,
09-Dec
Mon,
12-Dec
Tue,
13-Dec
Wed,
14-Dec
Henry Hub
3.66
3.75
3.57
3.60
3.52
New York
4.20
4.04
3.64
4.46
19.35
Chicago
3.69
3.81
3.66
3.78
3.78
Cal. Comp. Avg.*
3.61
3.74
3.60
3.61
3.53
Futures ($/MMBtu)
January contract
3.695
3.746
3.507
3.474
3.540
February contract
3.676
3.741
3.510
3.475
3.558
*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: (12/8/16 - 12/14/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.7
79.9
82.0
Dry production
71.6
71.8
74.0
Net Canada imports
5.6
5.1
5.4
LNG pipeline deliveries
0.3
0.2
0.2
Total supply
77.6
77.1
79.7

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: (12/1/16 - 12/7/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
87.3
79.6
67.7
    Power
25.0
23.2
22.0
    Industrial
22.7
22.3
21.0
    Residential/commercial
39.6
34.0
24.6
Mexico exports
3.5
3.7
3.3
Pipeline fuel use/losses
7.5
6.9
5.8
LNG pipeline receipts
1.3
1.5
0.0
Total demand
99.6
91.6
76.9

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, December 09, 2016
Change from
 
last week
last year
Oil rigs
498
4.4%
-5.0%
Natural gas rigs
125
5.0%
-32.4%
Miscellaneous
1
0.0%
0.0%
Rig numbers by type
Fri, December 09, 2016
Change from
 
last week
last year
Vertical
70
6.1%
-23.1%
Horizontal
503
3.7%
-9.2%
Directional
51
10.9%
-20.3%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-12-09
2016-12-02
change
East
865
899
-34
Midwest
1,071
1,112
-41
Mountain
244
256
-12
Pacific
312
323
-11
South Central
1,314
1,363
-49
Total
3,806
3,953
-147
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(12/9/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
899
-3.8
871
-0.7
Midwest
1,071
0.0
1,009
6.1
Mountain
203
20.2
198
23.2
Pacific
361
-13.6
349
-10.6
South Central
1,322
-0.6
1,193
10.1
Total
3,856
-1.3
3,620
5.1
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Dec 08)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
198
-13
28
0
0
0
Middle Atlantic
180
-21
11
0
0
0
E N Central
224
-6
32
0
0
0
W N Central
246
-11
62
0
0
0
South Atlantic
130
-11
0
15
6
4
E S Central
143
-1
6
0
-1
0
W S Central
114
8
22
0
-3
0
Mountain
240
26
71
0
0
0
Pacific
126
13
51
0
-1
0
United States
179
-2
32
3
1
1
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Dec 08, 2016

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

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Dec 08, 2016

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

Source: NOAA National Weather Service