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Natural Gas Weekly Update

for week ending July 12, 2017   |  Release date:  July 13, 2017   |  Next release:  July 20, 2017   |   Previous weeks


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

In the News:

Access Northeast natural gas pipeline project withdraws from FERC pre-filing

On June 29, Enbridge Inc.’s Algonquin Gas Transmission, LLC (AGT) withdrew its pre-filing application with the Federal Energy Regulatory Commission (FERC) for its proposed Access Northeast pipeline expansion. The $3.2 billion Access Northeast project would have expanded or upgraded approximately 125 miles of the Algonquin pipeline system, which moves gas from an interconnect with the Texas Eastern Pipeline in New Jersey to the Boston area. The project would have added about 1.0 billion cubic feet per day (Bcf/d) of peak day capacity to the Algonquin pipeline’s existing 3.1 Bcf/d peak day capacity (including connections to the Everett and Northeast Gateway LNG facilities).

Access Northeast was initially proposed in 2015 by Spectra Energy Partners, LP, which owned the existing Algonquin system at that time, along with partners Eversource Energy and National Grid, each of which distribute electricity and natural gas in New England and elsewhere. (Enbridge acquired Spectra Energy Partners, LP in February 2017.) In addition to expanding pipeline capacity, the project also included a $600 million 6.8 Bcf liquefied natural gas (LNG) storage facility to provide natural gas to electricity generators at peak demand times.

Increased demand for natural gas has caused pipeline constraints in the region on especially cold winter days, leading to increased natural gas spot prices and, in turn, higher wholesale electricity prices. From 2000 to 2016, approximately 1.6 gigawatts (GW) of dispatchable non-gas electricity generation capacity (net) has retired in New England, and more than 10.4 GW of natural gas-fired generation capacity (net) has been added. Accordingly, during that time, natural gas-fired generation has gone from supplying about 20% to nearly 50% of New England’s electricity generation.

The Access Northeast project had challenges getting electricity generators to commit to firm transportation contracts. A surcharge on all electric ratepayers was proposed to recoup some associated costs. The Massachusetts Department of Public Utilities (DPU) had approved the basis for instituting the surcharge on December 21, 2015, but the Massachusetts Supreme Judicial Court overruled the DPU on August 17, 2016, and the surcharge was not instituted.

Although no new major pipeline expansions are currently pending with FERC, New England is currently served by nearly 6.5 Bcf/d of peak day pipeline capacity via five major pipeline systems. Included in that number is the 0.342 Bcf/d added by the Algonquin Incremental Market project, which entered into service at the end of 2016 and was the first additional pipeline capacity in New England since 2010. Lastly, the Atlantic Bridge project, which plans to add about 0.13 Bcf/d of capacity to the Algonquin pipeline system, was granted a Certificate of Convenience and Necessity by FERC in January 2017 and is targeting initial service in the second half of 2017.

Overview:

(For the Week Ending Wednesday, July 12, 2017)

  • Natural gas spot prices rose at most locations this report week (Wednesday, July 5 to Wednesday, July 12). The Henry Hub spot price rose from $2.90 per million British thermal units (MMBtu) last Wednesday to $2.98/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the August 2017 contract price rose 15¢ from $2.840/MMBtu last Wednesday to $2.985/MMBtu yesterday.
  • Net injections to working gas totaled 57 billion cubic feet (Bcf) for the week ending July 7. Working natural gas stocks are 2,945 Bcf, which is 9% less than the year-ago level and 6% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 5¢, averaging $5.85/MMBtu for the week ending July 12. The price of natural gasoline fell by 2%. The price of ethane, propane, and butane rose by 1%, 2%, and 1%, respectively, while the price of isobutane remained flat week over week.
  • According to Baker Hughes, for the week ending Friday, July 7, the natural gas rig count increased by 5 to 189. The number of oil-directed rigs rose by 7 to 763. The total rig count increased by 12, and it now stands at 952.

more summary data

Prices/Supply/Demand:

Prices rise at most points. This report week (Wednesday, July 5 to Wednesday, July 12), the Henry Hub spot price rose 8¢ from $2.90/MMBtu last Wednesday to $2.98/MMBtu yesterday. At the Chicago Citygate, prices increased 11¢ from $2.75/MMBtu last Wednesday to $2.86/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 15¢, up from $3.15/MMBtu last Wednesday to $3.30/MMBtu yesterday. On Tuesday, natural gas flows into Northern California were curtailed as the capacity of a compressor station on the Gas Transmission Northwest pipeline had an unplanned decrease of nearly 1.0 Bcf/d, to 1.2 Bcf/d. Genscape data indicate natural gas flows at the compressor station averaged 1.6 Bcf/d for the week prior to the capacity reduction. The price at SoCal Citygate decreased 18¢ from $3.35/MMBtu last Wednesday to $3.17/MMBtu yesterday, reaching a high of $3.62/MMBtu on Thursday.

Northeast prices rise significantly. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 40¢ from $2.23/MMBtu last Wednesday to $2.63/MMBtu yesterday, as forecasts indicated high levels of cooling demand. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 82¢ from $2.23/MMBtu last Wednesday to $3.05/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 23¢ from $1.91/MMBtu last Wednesday to $2.14/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 26¢ from $1.97/MMBtu last Wednesday to $2.23/MMBtu yesterday.

Futures contract prices increase. At the Nymex, the price of the August 2017 contract increased 15¢, from $2.840/MMBtu last Wednesday to $2.985/MMBtu yesterday. The price of the 12-month strip averaging August 2017 through July 2018 futures contracts climbed 12¢ to $3.044/MMBtu.

Supply remains flat. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 77.8 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 6% from last week.

Demand rises with power burn. Total U.S. consumption of natural gas rose by 6% compared with the previous report week, according to data from PointLogic. Power burn climbed by 10% week over week, while industrial sector consumption stayed constant. In the residential and commercial sectors, consumption increased by 2%. Natural gas exports to Mexico were the same as last week, averaging 4.3 Bcf/d.

U.S. LNG exports increase week over week. Four vessels (combined LNG-carrying capacity of 15.2 Bcf) departed Sabine Pass last week (Thursday to Wednesday) and one vessel (LNG-carrying capacity of 3.1 Bcf) was loading at the terminal on Wednesday.

more price data

Storage:

Weekly net injections exceed the five-year average. Net injections into storage totaled 57 Bcf for the week ending July 7, compared with the five-year (2012–16) average net injection of 72 Bcf and last year's net injections of 61 Bcf during the same week. Net injections fell below the five-year average for the eighth time in the last 10 weeks. The smaller-than-average net injections this week likely resulted from the warmer-than-normal temperatures that prevailed throughout most of the Lower 48 states, which resulted in increased cooling demand for natural gas. This pattern was most pronounced in the South Central region, where net injections into storage fell 14 Bcf lower than the five-year average of 16 Bcf for the report week. The Midwest region was 6 Bcf lower than its five-year average of 26 Bcf for the week. Working gas stocks total 2,945 Bcf, which is 172 Bcf more than the five-year average and 289 Bcf lower than last year at this time.

So far in the 2017 refill season, net injections into working gas storage are lower than the five-year average in most regions of the Lower 48 states. Net injections into working gas totaled 894 Bcf since March 31, 2017—the traditional beginning of the refill season—compared with the five-year average of 987 Bcf. Smaller-than-average net injections during the 2017 injection season combined with high electric sector demand as a result of warmer-than-normal spring temperatures on average and relatively high levels of natural gas exports likely reflect that storage levels are already above historical norms. The East and Mountain regions stand out as the only regions where net injections have exceeded the five-year average. Cumulative net injections during the 2016 refill season totaled 756 Bcf by this time last year, which was also characterized by unusually high storage levels at the start of the 2016 refill season.

The January 2018 futures price is trading 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 $2.90/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.26/MMBtu, a difference of 36¢/MMBtu. The premium was 57¢ a year ago. This storage week the average natural gas spot price at the Henry Hub was 3¢/MMBtu lower than the front-month futures price at the Nymex.

Reported net implied flows into storage are close to the median of analyst expectations. According to The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 53 Bcf to 65 Bcf with a median of 59 Bcf. Prices of the Nymex futures contracts for August 2017 delivery at Henry Hub rose 1¢ to $2.98/MMBtu in 602 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices varied in subsequent trading, ranging between $2.98/MMBtu and $3.01/MMBtu.

Temperatures are warmer than normal in most parts of the Lower 48 states during storage week. Temperatures in the Lower 48 states averaged 76 degrees Fahrenheit (°F), 2°F higher than the average for this time of year and 2°F higher than last year at this time. Temperatures in parts of the South Central region, where natural gas-fired electricity generation for air conditioning plays a crucial role in summertime demand for natural gas, were warmer than normal. Temperatures in the West South Central Census division averaged 83°F, 1°F higher than the average for this time of year and 1°F lower than last year at this time. Temperatures in the East South Central Census division averaged 78°F, the same as the average for this time of year and the same as last year at this time.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
06-Jul
Fri,
07-Jul
Mon,
10-Jul
Tue,
11-Jul
Wed,
12-Jul
Henry Hub
2.88
2.89
2.91
2.99
2.98
New York
2.19
2.18
2.93
3.07
3.05
Chicago
2.70
2.70
2.76
2.88
2.86
Cal. Comp. Avg.*
3.01
2.88
2.89
2.96
2.99
Futures ($/MMBtu)
August Contract
2.888
2.864
2.929
3.047
2.985
September Contract
2.881
2.857
2.924
3.038
2.975
*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: (7/6/17 - 7/12/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
80.7
81.5
80.2
Dry production
71.7
72.4
71.4
Net Canada imports
6.2
5.8
6.0
LNG pipeline deliveries
0.0
0.0
0.0
Total supply
77.8
78.2
77.5

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: (7/6/17 - 7/12/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
60.7
57.3
61.6
    Power
34.9
31.7
35.4
    Industrial
19.7
19.6
19.4
    Residential/commercial
6.1
6.0
6.8
Mexico exports
4.3
4.3
3.8
Pipeline fuel use/losses
6.5
6.2
6.6
LNG pipeline receipts
2.2
2.1
0.7
Total demand
73.7
69.8
72.7

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, July 07, 2017
Change from
 
last week
last year
Oil rigs
763
0.9%
117.4%
Natural gas rigs
189
2.7%
114.8%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, July 07, 2017
Change from
 
last week
last year
Vertical
74
-3.9%
21.3%
Horizontal
804
1.5%
134.4%
Directional
74
4.2%
105.6%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-07-07
2017-06-30
change
East
588
564
24
Midwest
719
699
20
Mountain
193
187
6
Pacific
292
287
5
South Central
1,153
1,151
2
Total
2,945
2,888
57
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(7/7/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
675
-12.9
628
-6.4
Midwest
782
-8.1
658
9.3
Mountain
207
-6.8
165
17.0
Pacific
318
-8.2
320
-8.8
South Central
1,252
-7.9
1,003
15.0
Total
3,234
-8.9
2,773
6.2
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Jul 06)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
1
-1
-1
51
19
12
Middle Atlantic
0
-1
-3
66
18
21
E N Central
1
-1
-12
56
6
33
W N Central
1
-2
-6
62
-2
17
South Atlantic
0
0
0
107
15
9
E S Central
0
0
0
93
5
0
W S Central
0
0
0
123
5
-8
Mountain
1
-8
1
93
21
12
Pacific
0
-6
-1
53
17
4
United States
0
-2
-4
79
12
12
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Jul 06, 2017

Mean Temperature (F) 7-Day Mean ending Jul 06, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Jul 06, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending Jul 06, 2017

Source: NOAA National Weather Service