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Natural Gas Weekly Update

for week ending March 14, 2018   |  Release date:  March 15, 2018   |  Next release:  March 22, 2018   |   Previous weeks


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

In the News:

Natural gas-fired generation gains market share in Texas

In February 2018, natural gas-fired generation gained market share in Texas, according to the most recent demand and energy report from Electric Reliability Council of Texas (ERCOT). The share of generation from natural gas-fired power plants increased by 3.2 percentage points to almost 42% from January to February. The generation share from nuclear power plants increased by 1.1 percentage points while wind power plants increased by about 1.5 percentage points.

Coal-fired power plants saw their share of total generation decrease from 28% in January to a little less than 23% in February. This decrease is largely the result of coal generation dropping significantly from the previous month (the largest difference between months in more than 15 years), and corresponds to a 34% drop in coal generation compared to an 18% drop in total generation from January to February. This decrease in coal generation likely reflects the retirement of capacity (net summer capacity shown) at three coal power plants in Texas: Sandow Power Plant’s Unit 4 and Unit 5, totaling 1,200 megawatts (MW); all three units at the 1,865-MW Monticello Steam Electric Station in January; and both units at the 1,208-MW Big Brown Power Plant in February. Offsetting this decrease in capacity is capacity that was added last year, which included 6 units at 2 natural gas combined-cycle plants, totaling 2,157 MW, and 10 wind power generators, totaling 1,669 MW. No coal capacity has been added in Texas since 2013.

Currently, 12 coal-fired power plants operate in ERCOT, with a net summer capacity of a little less than 15 gigawatts (GW). By comparison, 120 natural gas-fired plants currently operate in ERCOT with a capacity at about 56 GW. Coal’s share is likely to decrease further as Units 1 and 2 at the 840-MW JT Deely coal-fired plant are planned for retirement by the end of this year, according to EIA’s most recent monthly electric generator inventory report.

Additional generation capacity projects planned to come in service in ERCOT between 2018 and 2022 are nearly two-thirds natural gas-fired, according to EIA’s generator inventory report. Over the next four years, 19 units at 7 natural gas combined-cycle plants, with nameplate capacity totaling 5,176 MW, are planned to begin operations; however, construction has not started on any of them (as of this inventory report’s release). In addition, 38 units at 16 natural gas-fired combustion turbine plants, nameplate capacity totaling 6,090 MW, are planned, with two projects near completion (nameplate capacity 549 MW) and seven projects under construction (nameplate capacity 1,575 MW). No natural gas-fired power plants are slated for retirement this year in ERCOT.

Overview:

(For the Week Ending Wednesday, March 14, 2018)

  • Natural gas spot price movements were mixed this report week (Wednesday, March 7, to Wednesday, March 14). The Henry Hub spot price fell from $2.77 per million British thermal units (MMBtu) last Wednesday to $2.66/MMBtu yesterday, but, on average, the Henry Hub price for the week rose 5¢, from $2.66/MMBtu last report week to $2.71/MMBtu this report week.
  • At the New York Mercantile Exchange (Nymex), the April 2018 contract price fell 5¢ from $2.777/MMBtu last Wednesday to $2.731/MMBtu yesterday.
  • Net withdrawals from working gas totaled 93 billion cubic feet (Bcf) for the week ending Friday, March 9. Working natural gas stocks are 1,532 Bcf, which is 32% lower than the year-ago level and 16% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 9¢, averaging $7.08/MMBtu for the week ending March 14. The price of propane, butane, and isobutane fell by 4%, 1%, and 2%, respectively. The price of ethane rose by 2%. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, March 6, the natural gas rig count increased by 7 to 188. The number of oil-directed rigs fell by 4 to 796. The total rig count increased by 3, and it now stands at 984.

more summary data

Prices/Supply/Demand:

The Henry Hub weekly average price increases with colder weather in many of the Lower 48 states. As average temperatures for states east of the Mississippi were colder this report week (Wednesday, March 7, to Wednesday, March 14) compared with the last report week, the average price for the week rose 5¢, from $2.66/MMBtu last report week to $2.71/MMBtu this report week. Temperatures in the Lower 48 states were expected to be warmer today than last Thursday, supporting a Wednesday-to-Wednesday decline in the Henry Hub day-ahead spot price of 11¢ from $2.77/MMBtu last Wednesday to $2.66/MMBtu yesterday.

Similarly, prices at key Midwest trading hub move with weather expectations. At the Chicago Citygate, prices decreased 11¢ from $2.64/MMBtu last Wednesday to $2.53/MMBtu yesterday, while corresponding delivery-day temperatures in the Midwest generally rose. However, the average price for the week increased 9¢, from $2.48/MMBtu last report week to $2.56/MMBtu this report week. Average temperatures for this report week decreased throughout the Midwest compared with last report week.

Southern California prices increase with supply constraints, and Northern California prices are mostly flat. The price at SoCal Citygate in Southern California increased 45¢ from $2.97/MMBtu last Wednesday to $3.42/MMBtu yesterday, and the average price for the week rose 18¢, from $3.02/MMBtu last report week to $3.20/MMBtu this report week. Midweek prices for next-day delivery reached $5.49/MMBtu on March 13, 2018. On this same day, Southern California Gas Company (SoCalGas) issued a critical notice that demand in Southern California was expected to increase with colder weather. Pipeline capacity through a key delivery corridor (the Southern Zone) was limited to 900 million cubic feet per day (MMcf/d) until further notice because of maintenance. At times of increased demand, this zone typically accounts for flows greater than 1,000 MMcf/d.

Prices at PG&E Citygate in Northern California were mostly flat and fell 3¢, from $2.86/MMBtu last Wednesday to $2.83/MMBtu yesterday. Average prices for the week increased 1¢, from $2.80/MMBtu last report week to $2.81 this report week.

Northeast prices mostly rise with colder weather. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $1.65 from $4.20/MMBtu last Wednesday to $5.85/MMBtu yesterday, while the average price for the week rose $1.01/MMBtu, from $3.18/MMBtu last report week to $4.19/MMBtu this report week. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 26¢ from $3.09/MMBtu last Wednesday to $2.83/MMBtu yesterday, but the average price for the week increased by 19¢, from $2.79/MMBtu last report week to $2.98/MMBtu this report week. Average temperatures for the week throughout the Northeast were colder this report week compared with the last report week.

Appalachian prices rise. Tennessee Zone 4 Marcellus spot prices increased 13¢ from $2.26/MMBtu last Wednesday to $2.39/MMBtu yesterday, and the average price for the week increased by 27¢, from $2.12/MMBtu last report week to $2.40/MMBtu this report week. Prices at Dominion South in northwest Pennsylvania rose 18¢ from $2.30/MMBtu last Wednesday to $2.48/MMBtu yesterday, and the average price for the week rose 27¢, from $2.20/MMBtu last report week to $2.46/MMBtu this report week. Both hubs have been trading at a discount to the Henry Hub price. However, with increased demand from colder weather this week, the discount narrowed at both hubs this report week compared with last report week.

Nymex prices fall. At the Nymex, the price of the April 2018 contract decreased 5¢, from $2.777/MMBtu last Wednesday to $2.731/MMBtu yesterday. The price of the 12-month strip averaging April 2018 through March 2019 futures contracts declined 2¢ to $2.912/MMBtu.

Canadian imports drive supply increases. According to data from PointLogic Energy, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 13% from last week.

Consumption in end-use demand sectors increases. With colder temperatures in many parts of the Lower 48 states, total U.S. consumption of natural gas rose by 5% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption increased by 2% week over week. In the residential and commercial sectors where natural gas use for space heating is common, consumption increased by 9%. Natural gas exports to Mexico decreased 1%.

U.S. liquefied natural gas (LNG) exports decrease week over week. Four vessels (LNG-carrying capacity 14.8 Bcf) departed the Sabine Pass liquefaction facility from March 8 to March 14. Two vessels (combined LNG-carrying capacity 7.5 Bcf) were loading at the terminal on Wednesday.

Dominion Energy Cove Point facility loaded its first cargo on March 1. This cargo is now headed to the Dragon LNG import terminal in the United Kingdom after being redirected in the middle of the Atlantic from heading to South America or the Cape of Good Hope, according to Bloomberg ship tracking data. A cold spell in Europe at the end of February-early March led to high natural gas consumption and a record-low level of natural gas in storage in the U.K., which was also affected by reduced storage capacity after the Rough storage facility was taken offline. Spot prices at the National Balancing Point (NBP) in the U.K. spiked to $31.68/MMBtu on March 1, the highest on record, and averaged $10.62/MMBtu in the first two weeks of March. In comparison, NBP spot prices averaged $7.71/MMBtu in the winter months of 2017-18 (December through February) and $6.27/MMBtu in the winter of 2016-17. A second vessel is en route to the Cove Point terminal and is scheduled to arrive on April 9, according to Bloomberg ship tracking data.

more price data

Storage:

Working gas net withdrawals are 4 Bcf lower than the five-year average. Net withdrawals from storage totaled 93 Bcf for the week ending March 9, compared with the five-year (2013–17) average net withdrawal of 97 Bcf and last year's net withdrawals of 55 Bcf during the same week. Working gas stocks totaled 1,532 Bcf, which is 296 Bcf lower than the five-year average and 718 Bcf lower than last year at this time.

Working gas levels are on pace to end the 2017— 18 heating season at the second-lowest level since 2010. Working gas stocks have rebounded since falling to 59 Bcf lower than the five-year minimum range and 486 Bcf lower than the five-year average for the Lower 48 states on January 19, 2018. If net withdrawals from working gas stocks match the five-year average for the remainder of the withdrawal season, working gas stocks will total 1,406 Bcf by March 31, 2018, which is 17% lower than the five-year average. Working gas stocks ended the 2013–14 heating season at 837 Bcf, which is the lowest reported level for that time since 2010.

The average April 2018 futures contract price trades at a premium to the average weekly spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.70/MMBtu, 4¢/MMBtu lower than the price of the front-month futures contract at the Nymex. A year ago, the spot price was 24¢ lower than the front-month contract.

Reported withdrawals out of storage are lower than most analysts’ expectations. According to the Desk survey of natural gas analysts, estimates of the weekly net change in working natural gas storage ranged from 91 Bcf to 105 Bcf, with a median of 99 Bcf. Prices for the futures contract for April delivery at the Henry Hub fell 2¢/MMBtu, to $2.71/MMBtu, in 1,690 trades executed following the release of the Weekly Natural Gas Storage Report. Prices varied in subsequent trading and were between $2.70/MMBtu and $2.71/MMBtu.

Temperatures were higher than normal during the storage week. Temperatures in the Lower 48 states averaged 43 degrees Fahrenheit (°F), 1°F higher than the normal and 1°F lower than last year at this time. The average temperature was 2°F lower than the prior storage week.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
08-Mar
Fri,
09-Mar
Mon,
12-Mar
Tue,
13-Mar
Wed,
14-Mar
Henry Hub
2.71
2.68
2.77
2.76
2.66
New York
2.79
2.85
3.13
3.41
2.83
Chicago
2.56
2.50
2.64
2.63
2.53
Cal. Comp. Avg.*
2.42
2.32
2.57
2.65
2.43
Futures ($/MMBtu)
April contract
2.756
2.732
2.778
2.786
2.731
May contract
2.787
2.759
2.800
2.809
2.759
*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: (3/8/18 - 3/14/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
88.1
88.0
79.8
Dry production
78.4
78.3
71.3
Net Canada imports
7.0
6.2
5.6
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
85.6
84.8
77.1

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: (3/8/18 - 3/14/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
80.8
76.6
76.8
    Power
23.5
22.6
22.7
    Industrial
22.4
22.0
21.8
    Residential/commercial
35.0
32.0
32.3
Mexico exports
4.2
4.2
4.2
Pipeline fuel use/losses
7.1
6.7
6.7
LNG pipeline receipts
3.1
3.4
1.6
Total demand
95.2
91.0
89.3

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, March 09, 2018
Change from
 
last week
last year
Oil rigs
796
-0.5%
29.0%
Natural gas rigs
188
3.9%
24.5%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, March 09, 2018
Change from
 
last week
last year
Vertical
61
3.4%
-10.3%
Horizontal
848
0.1%
32.7%
Directional
75
0.0%
23.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-03-09
2018-03-02
change
East
314
359
-45
Midwest
350
380
-30
Mountain
93
97
-4
Pacific
169
177
-8
South Central
606
612
-6
Total
1,532
1,625
-93
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(3/9/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
373
-15.8
346
-9.2
Midwest
560
-37.5
414
-15.5
Mountain
137
-32.1
125
-25.6
Pacific
203
-16.7
214
-21.0
South Central
976
-37.9
729
-16.9
Total
2,250
-31.9
1,828
-16.2
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Mar 08)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
190
-34
-41
0
0
0
Middle Atlantic
204
-7
-5
0
0
0
E N Central
195
-28
10
0
-1
0
W N Central
199
-24
29
0
-1
0
South Atlantic
132
2
12
9
-1
-2
E S Central
118
-7
17
0
-3
0
W S Central
51
-27
-1
10
1
-2
Mountain
181
8
25
0
-1
0
Pacific
119
24
12
0
-1
0
United States
158
-9
9
3
0
-1
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Mar 08, 2018

Mean Temperature (F) 7-Day Mean ending Mar 08, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Mar 08, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Mar 08, 2018

Source: NOAA National Weather Service