Natural Gas

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Natural Gas Weekly Update

for week ending February 22, 2017   |  Release date:  February 23, 2017   |  Next release:  March 2, 2017   |   Previous weeks


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

In the News:

Drilling Productivity Report forecasts production rise in six out of seven shale regions

Natural gas gross withdrawals are forecast to increase from February to March in six of the seven most prolific shale regions in the Lower 48 states, according to EIA’s most recent Drilling Productivity Report (DPR). This is the first time since March 2015 that more than five of the seven shale regions have seen month-to-month increases. Through March, the DPR forecasts that only the Eagle Ford shale region has decreasing production; natural gas production in Eagle Ford has been declining since December 2015. The DPR expects total production from the seven shale regions to reach an all-time high of 48.6 billion cubic feet per day (Bcf/d) in February, followed by a new record of 49.1 Bcf/d in March (note these projections do not consider weather, capacity constraints, or changes in realized prices). The previous record production level from these regions was 48.3 Bcf/d in August 2016.

Currently, the seven shale regions covered in the DPR account for more than half of the total natural gas gross withdrawals in the Lower 48 states, compared to about a quarter of the total in 2009. Production from these regions has been increasing at an average annual rate of 14% since 2007. These production rises came as well laterals became longer and overall rig productivity steadily rose. However, the average annual growth rate was at its lowest in 2016 (January through November); gross withdrawals were only 5% higher compared to the same period in 2015.

In contrast, natural gas gross withdrawals in the rest of the Lower 48 states have been decreasing by an average of 4% annually since 2009. Natural gas gross withdrawals outside the DPR shale regions were down by 8% in the first 11 months of 2016 compared to the same period in 2015. As a result, total gross withdrawals in the Lower 48 states (including the DPR regions) were slightly down compared to 2015 (January through November), even while reaching an all-time monthly record of 92.0 Bcf/d in February 2016.

Overview:

(For the Week Ending Wednesday, February 22, 2017)

  • Natural gas spot prices fell at most locations this report week (Wednesday, February 15 to Wednesday, February 22). The Henry Hub spot price fell from $2.92 per million British thermal units (MMBtu) last Wednesday to $2.53/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the March 2017 contract fell 33¢ from $2.925/MMBtu last Wednesday to $2.592/MMBtu yesterday.
  • Net withdrawals from working gas totaled 89 billion cubic feet (Bcf) for the week ending February 17. Working natural gas stocks are 2,356 Bcf, which is 10% less than the year-ago level and 7% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 20¢, closing at $7.50/MMBtu for the week ending February 17. The prices of propane, butane, and isobutane fell by 3%, 5%, and 7%, respectively. The price of natural gasoline rose by 1%. The price of ethane remained flat week over week.
  • According to Baker Hughes, for the week ending Friday, February 17, the natural gas rig count increased by 4 to 153. The number of oil-directed rigs rose by 6 to 597. The total rig count increased by 10, and it now stands at 751.

more summary data

Prices/Supply/Demand:

Prices fall sharply everywhere on unseasonably warm weather. This report week (Wednesday, February 15 to Wednesday, February 22), the Henry Hub spot price fell 39¢ from $2.92/MMBtu last Wednesday to $2.53/MMBtu yesterday, a 13% decrease. This is the lowest Henry Hub price since mid-November 2016, when the price dipped nearly to $2.00/MMBtu on mild weather and high storage stocks. Weather was warmer virtually everywhere in the country by the end of the report period, with temperatures breaking records.

At the Chicago Citygate, prices decreased 25¢ to $2.59/MMBtu yesterday. The price at SoCal Citygate decreased 23¢ to $2.82/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 24¢ to $3.06/MMBtu yesterday.

Northeast prices down sharply. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $1.83 from $4.02/MMBtu last Wednesday to $2.19/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices fell $1.01 to $2.10/MMBtu yesterday.

Several Appalachian price points fell below the $2.00/MMBtu mark this week. Tennessee Zone 4 Marcellus spot prices decreased 53¢ to $1.93/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 56¢ from $2.64/MMBtu last Wednesday to $2.08/MMBtu yesterday.

March Nymex contract down. At the Nymex, the price of the March 2017 contract decreased 33¢, from $2.925/MMBtu last Wednesday to $2.592/MMBtu yesterday. The price of the 12-month strip, averaging March 2017 through February 2018 futures contracts, declined 30¢ to $2.950/MMBtu.

Supply falls slightly. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 12% from last week.

Demand falls across all sectors. Total U.S. consumption of natural gas fell by 15% compared with the previous report week, according to data from PointLogic. Power burn declined by 3%; industrial sector consumption declined by 4%, and residential and commercial sector consumption declined by 29%. Natural gas exports to Mexico decreased 2%.

U.S. liquefied natural gas (LNG) exports increase. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 2.2 Bcf/d for the report week, 12% higher than in the previous week. Three vessels (combined LNG-carrying capacity of 11.0 Bcf) departed Sabine Pass last week, and one vessel (LNG-carrying capacity of 3.0 Bcf) is currently loading at the terminal.

more price data

Storage:

Continued unseasonable mild temperatures during the week contribute to lower than average net withdrawals. Net withdrawals from storage totaled 89 Bcf, compared with the five-year (2012–16) average net withdrawal of 158 Bcf and last year's net withdrawals of 131 Bcf during the same week. Warmer temperatures throughout the week for most of the Lower 48 states contributed to decreased heating demand for natural gas and lower withdrawals from storage. Working gas stocks total 2,356 Bcf, which is 156 Bcf more than the five-year average and 261 Bcf less than last year at this time.

Surplus of working gas to the five-year average continues to rise. Working gas stocks increased compared with the five-year average for the fourth time in the last five weeks. In the South Central salt region, the surplus relative to the five-year average totaled 127 Bcf—by far the largest surplus in the Lower 48 states. Working gas stocks in the South Central salt region have topped the five-year average for 98 weeks in a row—a streak that dates back to April 10, 2015, and likely can be attributed, in part, to the ongoing expansion of storage facilities in the region since 2013. The South Central nonsalt region is 15 Bcf above its five-year average, posting its first surplus of 2017.

The Midwest region was 80 Bcf more than the five-year average, and the surplus in the Mountain region was 9 Bcf. After dipping below its five-year average for the first time since October 23, 2015, working gas stocks in the Midwest region have increased for the last five consecutive weeks.

The East and Pacific regions are 41 Bcf and 34 Bcf below their five-year averages, respectively. Working gas stocks in the Pacific region have been below the five-year average since last August as a result of the shut-in at the Aliso Canyon facility.

Working gas stocks remain on pace to end the 2016–17 heating season above 1,900 Bcf. If working gas stock changes follow the five-year average for the remainder of the heating season, they will total 1,944 Bcf on March 31. So far in 2017, net withdrawals are 17% below the five-average. Following this slower-than-normal pace, working gas stocks will total 2,101 Bcf by the end of the heating season, which would mark the third time since 2011 that working gas stocks ended the heating season above 1,900 Bcf. The only other times working gas levels topped this threshold at the end of the heating season were in 2012 and 2016, when working gas totaled 2,473 Bcf and 2,470 Bcf, respectively. Both of these heating seasons were characterized by warmer-than-normal temperatures and relatively light heating demand for natural gas.

Net withdrawals within range of market expectations; natural gas prices on the Nymex decrease. According to the Bloomberg survey of natural gas analysts, estimates of net natural gas withdrawals from storage generally ranged from 79 Bcf to 95 Bcf, with a median of 86 Bcf. The price of the Nymex futures contract for March 2017 delivery at Henry Hub, which is due to expire in trading tomorrow (February 24), increased 2¢/MMBtu to $2.64/MMBtu in 72 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Similarly, the price of the contract for April delivery gained 3¢/MMBtu in 311 contracts traded at the WNGSR release.

Unseasonably mild temperatures prevail throughout the Lower 48 states. Temperatures in the Lower 48 states averaged 43°F, 7°F higher than the normal and 9°F higher than last year at this time. This pattern prevailed throughout most of the Lower 48 states except for New England. Temperatures in the New England Census division averaged 25°F, 3°F lower than the normal and 8°F higher than last year at this time. Heating degree days (HDD) in the Lower 48 states totaled 159, compared with 220 last year and a normal of 202.

more storage data

See also:

Gross natural gas production by region


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
16-Jan
Fri,
17-Feb
Mon,
20-Feb
Tue,
21-Feb
Wed,
22-Feb
Henry Hub
2.82
2.75
Holiday
2.52
2.53
New York
2.71
2.49
Holiday
2.32
2.10
Chicago
2.81
2.69
Holiday
2.57
2.59
Cal. Comp. Avg.*
2.86
2.76
Holiday
2.68
2.63
Futures ($/MMBtu)
March Contract
2.854
2.834
Holiday
2.564
2.592
April Contract
2.971
2.951
Holiday
2.691
2.701
*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: (2/16/17 - 2/22/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.0
78.7
82.7
Dry production
70.5
70.2
74.1
Net Canada imports
5.6
6.4
5.7
LNG pipeline deliveries
0.1
0.2
0.3
Total supply
76.2
76.9
80.1

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: (2/16/17 - 2/22/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
65.3
76.7
76.7
    Power
20.4
21.0
22.2
    Industrial
21.1
22.1
21.9
    Residential/commercial
23.8
33.6
32.6
Mexico exports
4.0
4.1
3.4
Pipeline fuel use/losses
5.1
6.0
6.0
LNG pipeline receipts
2.2
2.0
0.5
Total demand
76.6
88.8
86.6

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, February 17, 2017
Change from
 
last week
last year
Oil rigs
597
1.0%
44.6%
Natural gas rigs
153
2.7%
51.5%
Miscellaneous
1
0.0%
0.0%
Rig numbers by type
Fri, February 17, 2017
Change from
 
last week
last year
Vertical
65
-4.4%
30.0%
Horizontal
614
1.2%
47.6%
Directional
72
9.1%
50.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-02-17
2017-02-10
change
East
431
479
-48
Midwest
612
642
-30
Mountain
146
150
-4
Pacific
206
205
1
South Central
961
969
-8
Total
2,356
2,445
-89
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(2/17/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
528
-18.4
472
-8.7
Midwest
658
-7.0
532
15.0
Mountain
147
-0.7
137
6.6
Pacific
256
-19.5
240
-14.2
South Central
1,029
-6.6
819
17.3
Total
2,617
-10.0
2,200
7.1
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Feb 16)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
278
16
-55
0
0
0
Middle Atlantic
229
-20
-83
0
0
0
E N Central
210
-60
-128
0
0
0
W N Central
186
-88
-116
0
0
0
South Atlantic
129
-34
-95
9
2
6
E S Central
110
-51
-98
2
2
2
W S Central
58
-53
-15
13
9
10
Mountain
149
-55
9
1
0
-2
Pacific
84
-20
49
0
0
0
United States
159
-43
-61
3
2
2
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Feb 16, 2017

Mean Temperature (F) 7-Day Mean ending Feb 16, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Feb 16, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 16, 2017

Source: NOAA National Weather Service