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Natural Gas Weekly Update

for week ending August 30, 2017   |  Release date:  August 31, 2017   |  Next release:  September 7, 2017   |   Previous weeks


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

Updated September 7, 2017 to conform to data from PointLogic.

In the News:

Federal Energy Regulatory Commission (FERC) regains quorum

On August 4, the Senate confirmed the nominations of Neil Chatterjee and Robert F. Powelson to fill two of the four open seats on the Federal Energy Regulatory Commission (FERC), ending a six-month, no-quorum period. FERC entered a no-quorum period in February of this year when the number of commissioners fell below the required minimum of three. With a voting quorum reestablished, the commissioners can begin issuing certifications for natural gas pipeline projects and considering other backlogged orders and issues. The first commission meeting, open to the public via webcast, will be held on September 20.

As of August 30, ten pre-filing applications have been submitted to FERC for natural gas pipeline projects, and 51 pipeline projects have FERC applications in process, according to data from PointLogic Energy. The combined proposed capacity of all these projects totals about 45 billion cubic feet per day (Bcf/d), covering over 3,000 miles of both new and upgraded pipeline construction. For context, the Lower 48 states have over 300,000 miles of interstate and intrastate transmission pipeline in use.

The 10 largest projects by capacity that have applications currently in process at FERC have a total capacity of 22.5 Bcf/d, accounting for 65% of the capacity for all natural gas pipeline applications. Five of these projects are located in the West South Central Census division and would support liquefied natural gas (LNG) export projects. The construction of four of these pipeline projects will likely be tied to the approval of the associated LNG export terminals. These projects include:

  • Rio Bravo Pipeline (Rio Grande LNG): a 137-mile pipeline in Texas with a capacity of 4.5 Bcf/d, connecting the Texas-based LNG facility to available interstate pipelines
  • Driftwood Pipeline (Driftwood LNG): a 96-mile pipeline in Louisiana with a capacity of 4 Bcf/d, connecting the Louisiana-based LNG facility to available interstate pipelines
  • Port Arthur Pipeline – Texas Connector (Port Arthur LNG): a 34-mile pipeline with a capacity of 2 Bcf/d, with segments starting in Texas and in Louisiana and terminating at the LNG facility in Texas
  • Gator Express Pipeline (Plaquemines LNG): a 27-mile pipeline in Louisiana with a capacity of 1.9 Bcf/d, connecting the LNG facility to the Tennessee Gas pipeline and the Texas Eastern Transmission pipeline.

In addition, the proposed Cheniere Midship Pipeline in Oklahoma is a 199-mile pipeline, with a capacity of 1.4 Bcf/d, which would connect to pipelines that support Cheniere’s export facilities and provide natural gas to other consumers along the Gulf Coast.

The other five relatively large proposed pipeline projects include projects that increase the delivery capacity from the Northeast’s Utica and Marcellus producing regions. These projects include:

In the Lower 48 states, 36 natural gas pipelines are under construction. The total capacity of these pipelines exceeds 21 Bcf/d and covers more than 2,200 miles, 22 pipelines of which do not extend beyond a state border, with 16 of those 22 pipelines in Pennsylvania, Texas, and New York.

Overview:

(For the Week Ending Wednesday, August 30, 2017)

  • Natural gas spot prices fell at most locations this report week (Wednesday, August 23 to Wednesday, August 30). The Henry Hub spot price fell from $2.92 per million British thermal units (MMBtu) last Wednesday to $2.86/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the September 2017 contract expired Tuesday at $2.961/MMBtu. The October 2017 contract price decreased to $2.939/MMBtu, down 2¢ Wednesday to Wednesday.
  • Net injections to working gas totaled 30 billion cubic feet (Bcf) for the week ending August 25. Working natural gas stocks are 3,155 Bcf, which is 7% less than the year-ago level and slightly higher than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 8¢, averaging $6.94/MMBtu for the week ending August 30. The price of natural gasoline, ethane, butane, and isobutane fell by 2%, 7%, 1%, and 1%, respectively. The price of propane rose by 2%.
  • According to Baker Hughes, for the week ending Friday, August 25, the natural gas rig count decreased by 2 to 180. The number of oil-directed rigs fell by 4 to 759. The total rig count decreased by 6, and it now stands at 940.
  • Tropical storm Harvey affected both offshore (down by 0.6 Bcf/d Wednesday) and onshore (down by 3 Bcf/d last Saturday) natural gas production, as well as demand in the Gulf Coast region, according to federal and state data.

more summary data

Prices/Supply/Demand:

Prices fall at most locations. This report week (Wednesday, August 23 to Wednesday, August 30), the Henry Hub spot price fell 6¢ from $2.92/MMBtu last Wednesday to $2.86/MMBtu yesterday. At the Chicago Citygate, prices decreased 5¢ from $2.84/MMBtu last Wednesday to $2.79/MMBtu yesterday.

In California, however, prices rose over the report week because of above-normal temperatures, according to NOAA data. The price at SoCal Citygate increased $1.40 from $3.20/MMBtu last Wednesday to $4.60/MMBtu yesterday, with prices peaking at $4.79/MMBtu on Tuesday, August 29. Prices at PG&E Citygate in Northern California rose 5¢, up from $3.31/MMBtu last Wednesday to $3.36/MMBtu yesterday. According to EIA’s Southern California Daily Energy Report, there was a net withdrawal of 800 million cubic feet (MMcf) from Southern California Gas Company (SoCalGas) storage facilities over the report week, with net withdrawals peaking at 600 MMcf on Tuesday. Daily natural gas send-out by Southern California Gas has exceeded 3 billion cubic feet per day (Bcf/d) from Monday through today.

Northeast prices continue to decline. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 16¢ from $2.26/MMBtu last Wednesday to $2.10/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 65¢ from $2.53/MMBtu last Wednesday to $1.88/MMBtu yesterday. Both prices reached their lowest value last Friday ($1.68/MMBtu and $1.39/MMBtu, respectively), which are the lowest prices observed in these markets since October 2016.

Tennessee Zone 4 Marcellus spot prices decreased 6¢ from $1.66/MMBtu last Wednesday to $1.60/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 14¢ from $1.74/MMBtu last Wednesday to $1.60/MMBtu yesterday.

Production and imports decline. The average total supply of natural gas fell by 2% compared with the previous week, according to data from PointLogic Energy. Dry natural gas production decreased by 2% compared with the previous report week, averaging 77.2 Bcf/d. Average net imports from Canada decreased by 6% from last week.

Overall demand decreases, led by decreases in the electric power sector. Total U.S. consumption of natural gas fell by 10% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 18% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption decreased by 7%. Natural gas exports to Mexico decreased 11% as flows on some pipelines into Mexico went to zero as a result of delivery issues in Texas.

Hurricane Harvey lowers natural gas production and consumption in the Gulf Coast region. As of noon on Wednesday, 611 MMcf/d (19%) of the natural gas production in the Federal Gulf of Mexico waters were shut-in because of Hurricane Harvey, according to estimates by the Bureau of Safety and Environmental Enforcement (BSEE). Shut-ins to onshore production have been higher, with production in the Eagle Ford region estimated to be down by 3 Bcf/d last Saturday from pre-storm estimates of 6 Bcf/d, according to the Texas Railroad Commission. Midstream infrastructure has been impacted by the storm as well. For example, the Enterprise Products Partners’ Shoup natural gas processing facility near Corpus Christi was shut down; Kinder Morgan declared a force majeure on Natural Gas Pipeline Company of America’s Louisiana line, located upstream of Cameron Parish, Louisiana; and Southern Company Gas declared a force majeure on its Golden Triangle Storage natural gas storage facility near Beaumont, Texas.

Natural gas consumption in the region has been, and will continue to be, reduced as a result of restricted operations at industrial facilities, ports, electric generators, and residential and commercial customers that have been forced out of their homes and businesses. As of this morning, the State of Texas estimates that 200,000 customers (1.7% of the state) are without power, and the State of Louisiana estimates 12,000 customers (less than 1% of the state) are without power. However, these outage numbers were higher earlier in the week.

Updated information on Hurricane Harvey’s impact on energy infrastructure and markets is available on the U.S. Department of Energy’s Emergency Situation Reports page and on EIA’s Energy Disruptions page.

U.S. LNG exports suspended because of Hurricane Harvey. Because the Sabine Pass terminal was not in the direct path of Hurricane Harvey, it continued to produce liquefied natural gas (LNG) during the report week, with pipeline deliveries to the terminal averaging 1.8 Bcf/d. However, only one tanker (LNG-carrying capacity 3.6 Bcf/d) departed the terminal last Thursday, and since then loadings have been suspended as tankers cannot enter the port of Sabine Pass. According to Bloomberg, two LNG tankers have been anchored offshore at some distance from the Sabine Pass terminal because Hurricane Harvey was forecast to move right past them before making landfall on Wednesday. According to Genscape estimates, the Sabine Pass facility had until Thursday (today) to continue to liquefy natural gas before LNG storage tanks would fill to capacity, after which the liquefaction process would have to be shut-in. In addition, Sabine Pilots, a company that guides marine traffic in the port of Sabine Pass, suspended services on August 25 until further notice, according to the company’s website.

more price data

Storage:

Weekly net injections are lower than the five-year average. Net injections into storage totaled 30 Bcf, compared with the five-year (2012–16) average net injection of 67 Bcf and last year's net injections of 46 Bcf during the same week. This week’s smaller-than-average net injections primarily resulted from increased cooling demand for natural gas because of warmer temperatures in the South Central region. Working gas stocks total 3,155 Bcf, which is 8 Bcf more than the five-year average and 239 Bcf less than last year at this time.

Net withdrawals from storage are reported in the South Central region for the seventh week in a row. This week marks the 11th week in row that net withdrawals were reported for salt facilities in the South Central region, totaling 14 Bcf this week. Working gas levels at nonsalt facilities in the the South Central region declined by 3 Bcf. The South Central nonsalt region has not reported a net injection since the storage week ending July 7. Net withdrawals from storage in the South Central salt region have totaled 33 Bcf so far during the 2017 refill season, compared with the five-year average net injections of 64 Bcf—a swing of -107 Bcf . Nevertheless, working gas stocks remain 3% higher than the five-year average.

Storage surplus compared to five-year average falls to lowest level in 2017. The difference between working gas levels and the five-year average fell to 8 Bcf—its lowest level since a deficit of 20 Bcf was reported for the week ending January 20, 2017. The storage surplus relative to the five-year average last peaked at 395 Bcf on March 10 and has posted declines in most weeks since then. Working gas stocks will end the refill season, on October 31, slightly above its five-year average of 3,842 Bcf, if net injections match the five-year average for the remainder of the season. However, if net injections continue at their current rate, working gas stocks will end the refill season at 3,719 Bcf.

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 1,074 Bcf since March 31, 2017—the traditional beginning of the refill season—compared with the five-year average of 1,104 Bcf over the same period. Smaller-than-average net injections to date during the 2017 injection season are the result of high electric sector demand (that was coupled with warmer-than-normal temperatures on average), relatively high levels of natural gas exports, and storage levels that were already above average at the start of the refill season. The East region is the only region where net injections have exceeded the five-year average. Cumulative net injections during the 2016 refill season in the Lower 48 states totaled 916 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 continues 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 $2.95/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.28/MMBtu, a difference of 32¢. The premium was 50¢ a year ago. The average natural gas spot price at the Henry Hub was 2¢ higher than the front-month futures price at the Nymex. A year ago, the spot price was 1¢ higher than the front-month contract.

Reported net implied flows into storage are close to analysts’ expectations. According to the Bloomberg survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 27 Bcf to 45 Bcf with a median of 31 Bcf. Prices on the futures contract for October delivery rose 1¢/MMBtu to $2.93/MMBtu with 209 contracts traded at the release of the Weekly Natural Gas Storage Report. Prices varied close to that level in subsequent trading.

Temperatures warmer than normal in most regions of the Lower 48 states during the week. Temperatures in the Lower 48 states averaged 75 degrees Fahrenheit (°F), 2°F higher than the normal and 1°F lower than last year at this time. Warmer-than-normal temperatures were widespread and occurred in all regions of the Lower 48 states, except the East and West North Central Census divisions. Temperatures in the Middle Atlantic and New England Census divisions averaged 71°F to 73°F, 3°F higher than the normal and 2°F lower than last year at this time. Temperatures in the East South Central Census division averaged 79°F, 2°F higher than the normal and 1°F higher than last year at this time. Temperatures in the West South Central Census division averaged 83°F, 1°F higher than the normal and 3°F higher than last year at this time. Temperatures in the Mountain Census division averaged 75°F, 2°F higher than the normal and the same as last year at this time. Temperatures in the Pacific Census division averaged 72°F, 2°F higher than the normal and 2°F lower than last year at this time.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
24-Aug
Fri,
25-Aug
Mon,
28-Aug
Tue,
29-Aug
Wed,
30-Aug
Henry Hub
2.96
2.93
2.92
2.88
2.86
New York
2.11
1.39
1.88
1.88
1.88
Chicago
2.87
2.82
2.85
2.81
2.79
Cal. Comp. Avg.*
3.00
2.99
3.26
3.44
3.39
Futures ($/MMBtu)
September Contract
2.949
2.892
2.925
2.961
Expired
October Contract
2.982
2.924
2.961
2.983
2.939
November Contract
3.053
2.997
3.030
3.053
3.014
*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: (8/24/17 - 8/30/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
80.7
82.0
80.2
Dry production
71.7
72.8
71.4
Net Canada imports
5.5
5.9
6.1
LNG pipeline deliveries
0.0
0.1
0.2
Total supply
77.2
78.7
77.7

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: (8/24/17 - 8/30/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
55.8
62.3
61.6
    Power
29.3
35.6
35.4
    Industrial
19.7
19.5
19.3
    Residential/commercial
6.7
7.2
6.9
Mexico exports
3.9
4.4
4.3
Pipeline fuel use/losses
6.0
6.7
6.6
LNG pipeline receipts
1.8
1.9
0.6
Total demand
67.4
75.2
73.2

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, August 25, 2017
Change from
 
last week
last year
Oil rigs
759
-0.5%
86.9%
Natural gas rigs
180
-1.1%
122.2%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, August 25, 2017
Change from
 
last week
last year
Vertical
64
-3.0%
3.2%
Horizontal
796
-0.4%
110.0%
Directional
80
-1.2%
66.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-08-25
2017-08-18
change
East
749
728
21
Midwest
840
821
19
Mountain
205
206
-1
Pacific
301
296
5
South Central
1,060
1,074
-14
Total
3,155
3,125
30
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(8/25/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
793
-5.5
757
-1.1
Midwest
900
-6.7
835
0.6
Mountain
222
-7.7
188
9.0
Pacific
310
-2.9
332
-9.3
South Central
1,169
-9.3
1,034
2.5
Total
3,394
-7.0
3,147
0.3
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Aug 24)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
1
-4
1
46
18
-12
Middle Atlantic
1
-2
1
58
17
-9
E N Central
7
0
4
42
2
-10
W N Central
8
0
4
45
-9
-5
South Atlantic
0
-1
0
109
23
-3
E S Central
0
0
0
96
14
6
W S Central
0
0
0
128
11
24
Mountain
0
-10
-3
72
5
-3
Pacific
0
-4
0
49
7
-17
United States
3
-2
1
73
10
-4
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Aug 24, 2017

Mean Temperature (F) 7-Day Mean ending Aug 24, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Aug 24, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending Aug 24, 2017

Source: NOAA National Weather Service