Natural Gas

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Natural Gas Weekly Update

for week ending April 19, 2017   |  Release date:  April 20, 2017   |  Next release:  April 27, 2017   |   Previous weeks


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

In the News:

Proposed expansion of Alliance pipeline capacity to Chicago market hub

On March 13, the Alliance Pipeline Company announced a non-binding call for expressions of interest for additional natural gas transportation service on its pipeline system. The proposed expansion would increase capacity by up to 0.5 billion cubic feet (Bcf/d), increasing the total throughput to over 2 Bcf/d, with an anticipated start date of November 1, 2020. If Alliance determines that sufficient interest has been received, and following a feasibility study, Alliance may commence a binding open season as early as the fall of 2017.

The 2,391-mile long Alliance pipeline moves wet natural gas (i.e., a mixture of methane and liquid hydrocarbons), primarily from Western Canada, to the Aux Sable natural gas plant liquids (NGPL) extraction and fractionation facility in Channahon, Illinois. After crossing the border in North Dakota, the 967-mile U.S. portion of the Alliance system extends southeast through Minnesota and Iowa, and ends at the Aux Sable plant. Since 2010, the pipeline added two lateral lines that pick up natural gas in North Dakota: the Prairie Rose transports up to 0.12 Bcf/d of wet natural gas from the Palermo Conditioning Plant, and the Tioga lateral receives up to 0.13 Bcf/d of natural gas from the Hess Tioga gas processing plant.

Alliance is somewhat unusual in that it transports natural gas prior to processing, as opposed to afterwards, like most U.S. long-haul natural gas pipelines. With limited demand for NGPL in Western Canada, the original designers of the Alliance pipeline determined that it would be economically favorable for Canadian producers to transport the growing volumes of Western Canadian natural gas production to Illinois for processing and marketing rather than building processing facilities in Western Canada and shipping the liquids and dry natural gas separately.

Dry gas processed at Aux Sable is delivered to several major interstate natural gas pipelines, including the ANR Pipeline Company, Natural Gas Pipeline Company of America, Midwestern Gas Transmission Company, and Vector Pipeline Company, for shipment to customers in Illinois, Indiana, Ohio, Michigan, and Ontario, Canada. NGPL recovered at Aux Sable are delivered to market by rail, pipelines, and direct connections to local refineries and petrochemical facilities.

Overview:

(For the Week Ending Wednesday, April 19, 2017)

  • Natural gas spot price movements around the United States were mixed this report week (Wednesday, April 12 to Wednesday, April 19). The Henry Hub spot price rose from $2.99 per million British thermal units (MMBtu) last Wednesday to $3.12/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the May 2017 contract price was flat Wednesday to Wednesday at $3.185/MMBtu.
  • Net injections to working gas totaled 54 Bcf for the week ending April 14. Working natural gas stocks are 2,115 Bcf, which is 15% less than the year-ago level and 15% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 13¢, averaging $6.50/MMBtu for the week ending April 19. The price of natural gasoline and ethane both fell by 1%. The price of propane, butane, and isobutane rose by 4%, 5%, and 3%, respectively.
  • According to Baker Hughes, for the week ending Friday, April 14, the natural gas rig count decreased by 3 to 162. The number of oil-directed rigs rose by 11 to 683. The total rig count increased by 8, and it now stands at 847.

more summary data

Prices/Supply/Demand:

Prices movements were mixed. This report week (Wednesday, April 12 to Wednesday, April 19), the Henry Hub spot price rose 13¢ from $2.99/MMBtu last Wednesday to $3.12/MMBtu yesterday. At the Chicago Citygate, prices were unchanged from last Wednesday at $2.96/MMBtu. Prices at PG&E Citygate in Northern California gained 3¢, up from $3.32/MMBtu last Wednesday to $3.35/MMBtu yesterday. The price at SoCal Citygate decreased 5¢ from $3.25/MMBtu last Wednesday to $3.20/MMBtu yesterday.

Prices in the Northeast exhibit wide oscillation. At the Algonquin Citygate, which serves Boston-area consumers, prices declined 9¢ from $3.03/MMBtu last Wednesday to $2.94/MMBtu yesterday. Algonquin prices displayed some large moves during the week, falling to a low of $2.62/MMBtu on Thursday, then increasing to a high of $3.44 on Tuesday as nuclear power plant outages in the Northeast contributed to increased demand for natural gas in the electricity sector. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 29¢ from $2.76/MMBtu last Wednesday to $3.05/MMBtu yesterday. Prices in New York also exhibited a wide range over the week, falling to a low of $2.44/MMBtu on Thursday.

Tennessee Zone 4 Marcellus spot prices decreased 10¢ from $2.65/MMBtu last Wednesday to $2.55/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 5¢ from $2.67/MMBtu last Wednesday to $2.72/MMBtu yesterday.

The Nymex contract was flat. At the Nymex, the price of the May 2017 contract was unchanged Wednesday to Wednesday at $3.185/MMBtu. The price of the 12-month strip averaging the May 2017 through April 2018 futures contracts climbed 1¢ to $3.385/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 5% from last week.

Demand falls in residential/commercial sector. Total U.S. consumption of natural gas fell by 6% compared with the previous report week, according to data from PointLogic. Power burn climbed by 6% week over week, and was the only sector where demand increased. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 28%, as temperatures exceeded seasonal norms in much of the nation. Natural gas exports to Mexico decreased 24%, with maintenance on the NET Mexico Pipeline continuing to restrict export flows.

U.S. liquefied natural gas (LNG) exports. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 1.9 Bcf/d for the report week, 14% lower than in the previous week. Four vessels (combined LNG-carrying capacity of 14.6 Bcf) departed Sabine Pass last week (Thursday to Wednesday) and one vessel (LNG-carrying capacity of 3.8 Bcf) was loading at the terminal on Wednesday, April 19.

more price data

Storage:

Warmer temperatures result in higher than average net injections into working gas storage. Net injections into storage totaled 54 Bcf, compared with the five-year (2012–16) average net injection of 35 Bcf and last year's net injections of 6 Bcf during the same week. Working gas stocks total 2,115 Bcf, which is 282 Bcf more than the five-year average and 368 Bcf less than last year at this time.

The East and Midwest regions post net injections for the first time this year. Net injections occurred in all regions of the Lower 48 states for the first time in 2017. Moreover, net injections topped the five-year average in each region except the Pacific region. Net injections in the East and Midwest regions totaled 23 Bcf, or 9 Bcf more the five-year average for the storage week. The South Central region totaled 26 Bcf net injections, 8 Bcf more than the five-year average for this time of year. Net injections of 2 Bcf in the Pacific region were 1 Bcf lower than its five-year average.

Working gas levels are 15% lower than last year's record levels, but well ahead of the five-year average. Working gas levels are 368 Bcf, or 15%, lower than last year's levels at this time. This year-over-year deficit prevails in each of the regions in the Lower 48 states. The East region has the largest year-over-year deficit of 132 Bcf, followed by the South Central region at 130 Bcf. The Midwest and Pacific regions are 51 Bcf and 48 Bcf lower than last year's levels, respectively. In contrast, working gas levels are 282 Bcf higher than the five-year average in the Lower 48 states and are higher than the five-year average in all regions except the East and the Pacific regions, which are 60 Bcf and 14 Bcf lower than the five-year average, respectively. The South Central region accounts for 221 Bcf of the surplus compared to the five-year average, and the Midwest region is 112 Bcf higher than the five-year average.

The January futures price continues to trade at a premium over the current spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.08/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.64/MMBtu, a difference of 56¢. The premium was 98¢ a year ago. The price premium provides incentives for continued injections of natural gas into storage.

Reported net injections are close to the high end of market expectations for the week. According to the Bloomberg survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 41 Bcf to 55 Bcf, with a median of 49 Bcf. Prices of the Nymex futures contract for May 2017 delivery at Henry Hub decreased 1¢/MMBtu to $3.16/MMBtu in 369 trades four seconds after the release of the Weekly Natural Gas Storage Report (WNGSR). Prices rebounded in subsequent trading, reaching $3.17/MMBtu.

Temperatures remain higher than normal in the Lower 48 states on average. Temperatures in the Lower 48 states averaged 56°F, 4°F higher than the normal and 6°F higher than last year at this time. Temperatures were warmer than normal in most areas of the Lower 48 states outside of the Pacific Census division. Temperatures in the Pacific Census division averaged 54°F, 1°F lower than the normal and 5°F lower than last year at this time.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
13-Apr
Fri,
14-Apr
Mon,
17-Apr
Tue,
18-Apr
Wed,
19-Apr
Henry Hub
2.98
Closed
3.06
3.06
3.12
New York
2.44
Closed
2.97
3.03
3.05
Chicago
2.87
Closed
2.97
2.94
2.96
Cal. Comp. Avg.*
2.99
Closed
3.00
3.00
3.02
Futures ($/MMBtu)
May Contract
3.227
Closed
3.163
3.145
3.185
June Contract
3.307
Closed
3.251
3.236
3.276
*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: (4/13/17 - 4/19/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
78.8
79.0
80.9
Dry production
69.9
70.1
72.0
Net Canada imports
5.2
5.4
5.6
LNG pipeline deliveries
0.0
0.0
0.2
Total supply
75.1
75.5
77.9

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: (4/13/17 - 4/19/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
54.7
58.2
61.4
    Power
23.1
21.7
23.2
    Industrial
20.2
20.7
20.6
    Residential/commercial
11.4
15.8
17.6
Mexico exports
2.9
3.8
3.4
Pipeline fuel use/losses
5.6
6.0
6.3
LNG pipeline receipts
2.0
2.3
0.6
Total demand
65.2
70.2
71.7

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, April 14, 2017
Change from
 
last week
last year
Oil rigs
683
1.6%
94.6%
Natural gas rigs
162
-1.8%
82.0%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, April 14, 2017
Change from
 
last week
last year
Vertical
77
5.5%
42.6%
Horizontal
706
1.6%
110.7%
Directional
64
-9.9%
25.5%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-04-14
2017-04-07
change
East
278
266
12
Midwest
487
476
11
Mountain
144
141
3
Pacific
223
221
2
South Central
983
957
26
Total
2,115
2,061
54
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(4/14/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
410
-32.2
338
-17.8
Midwest
538
-9.5
375
29.9
Mountain
152
-5.3
122
18.0
Pacific
271
-17.7
237
-5.9
South Central
1,113
-11.7
762
29.0
Total
2,483
-14.8
1,833
15.4
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Apr 13)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
92
-53
-68
0
0
0
Middle Atlantic
83
-45
-82
0
0
0
E N Central
92
-40
-92
0
0
0
W N Central
87
-37
-67
1
0
1
South Atlantic
50
-15
-45
13
0
1
E S Central
41
-18
-41
5
0
5
W S Central
15
-14
-10
29
12
6
Mountain
87
-34
6
7
0
1
Pacific
77
7
35
0
-2
-2
United States
73
-26
-43
7
2
1
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Apr 13, 2017

Mean Temperature (F) 7-Day Mean ending Apr 13, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Apr 13, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending Apr 13, 2017

Source: NOAA National Weather Service