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Natural Gas Weekly Update

for week ending March 21, 2018   |  Release date:  March 22, 2018   |  Next release:  March 29, 2018   |   Previous weeks


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

In the News:

California Public Utilities Commission directs SoCalGas to maximize storage injections for summer reliability

On March 13, the California Public Utilities Commission (CPUC) issued a letter to the Southern California Gas Company (SoCalGas)—owner and operator of Southern California’s four underground storage facilities—directing them to maximize injections into their natural gas storage facilities to avoid possible future service disruptions. According to the CPUC, SoCalGas’s inventory is critically low after winter withdrawals, and storage is needed for summer reliability.

As of March 18, SoCalGas reported 48 billion cubic feet (Bcf) in working gas inventory for all four of their storage facilities (64% of 75.5 Bcf of total working gas capacity). SoCalGas’s Aliso Canyon storage facility, California’s largest, has been heavily restricted since experiencing a leak from October 2015–February 2016, which reduced its working gas capacity to 24.6 Bcf from 86 Bcf. In early March, SoCalGas reported that storage at its three smaller facilities was close to 28 Bcf, or 53% of unrestricted capacity.

Heating degree days in the Pacific Region since the week of February 18, 2018, have been 29% higher than normal on average for this time of year. To respond to this heightened demand, CPUC granted permission for SoCalGas to withdraw 1.1 Bcf of natural gas from Aliso Canyon in six intervals between February 19–March 6. Since reaching $19.58 per million British thermal units (MMBtu) on February 20—the highest recorded price at the SoCal Citygate—natural gas prices have remained elevated relative to the Henry Hub spot price, averaging $3.34/MMBtu. The Henry Hub spot price has averaged $2.65/MMBtu during this same period.

Inventory in SoCalGas’s four storage facilities has been down significantly since a peak of 125 Bcf at the time the Aliso Canyon leak was discovered in October 2015. SoCalGas inventories had reached their lowest levels—18.5 Bcf in March 2014—prior to the leak and after a particularly cold winter. At the time, Aliso Canyon had its full storage capacity available, and CPUC did not intervene. Although storage levels last year at this time were lower (39.2 Bcf in working gas capacity) than this year, CPUC did not issue a letter of concern about last year’s levels until last July. In addition to critically low storage levels and cold weather this year, ongoing unplanned maintenance and outages on two major pipelines (Line 3000 and Line 235-2) is continuing to cause supply constraints.

CPUC granted SoCalGas an extension to provide a detailed plan via an advice letter. The plan will outline minimum month-end storage targets for May 2018–December 2018. It will project how much natural gas the company will need to procure to ensure system reliability and associated costs.

Overview:

(For the Week Ending Wednesday, March 21, 2018)

  • Natural gas spot prices rose at most locations this report week (Wednesday, March 14 to Wednesday, March 21). The Henry Hub spot price rose from $2.66/MMBtu last Wednesday to $2.70/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the April 2018 contract price fell 9¢ from $2.731/MMBtu last Wednesday to $2.638/MMBtu yesterday.
  • Net withdrawals from working gas totaled 86 Bcf for the week ending March 16. Working natural gas stocks are 1,446 Bcf, which is 32% lower than the year-ago level and 19% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 19¢, averaging $7.26/MMBtu for the week ending March 21. The price of butane and isobutane fell by 1% and 2%, respectively. The price of ethane and propane rose by 4% and 6%, respectively. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, March 13, the natural gas rig count increased by 1 to 189. The number of oil-directed rigs rose by 4 to 800. The total rig count increased by 6, and it now stands at 990—the highest level since April 2015.

more summary data

Prices/Supply/Demand:

Spot prices rise around the country. This report week (Wednesday, March 14 to Wednesday, March 21), the Henry Hub spot price rose 4¢ from $2.66/MMBtu last Wednesday to $2.70/MMBtu yesterday. At the Chicago Citygate, prices increased 4¢ from $2.53/MMBtu last Wednesday to $2.57/MMBtu yesterday, with a low of $2.45/MMBtu on Friday. Prices at PG&E Citygate in Northern California fell 14¢, down from $2.83/MMBtu last Wednesday to $2.69/MMBtu yesterday. The price at SoCal Citygate increased 40¢ from $3.42/MMBtu last Wednesday to $3.82/MMBtu yesterday. The SoCal price was volatile throughout the week, in part because of continuing pipeline maintenance and deliverability issues, and reached a low of $2.91/MMBtu on Monday.

Northeast prices are mixed. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $2.03 from $5.85/MMBtu last Wednesday to $3.82/MMBtu yesterday, with a high of $7.62/MMBtu on Friday. The Pilgrim nuclear plant in Plymouth, Massachusetts, which was taken offline on March 6, remained offline as of yesterday. The shutdown of nuclear power plants can increase demand for electricity from other power sources, including natural gas-fired power plants. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 7¢ from $2.83/MMBtu last Wednesday to $2.90/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 11¢ from $2.39/MMBtu last Wednesday to $2.50/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 4¢ from $2.48/MMBtu last Wednesday to $2.52/MMBtu yesterday.

Nymex prices fall. At the Nymex, the price of the April 2018 contract decreased 9¢, from $2.731/MMBtu last Wednesday to $2.638/MMBtu yesterday. The price of the 12-month strip averaging April 2018 through March 2019 futures contracts declined 8¢ to $2.836/MMBtu.

Supply remains flat. According to data from PointLogic Energy, the average total supply of natural gas remained the same as in the previous report week, averaging 86.2 Bcf/d. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 2% from last week.

Demand falls. Total U.S. consumption of natural gas fell by 5% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption decreased by 3% week over week. In the residential and commercial sectors, consumption declined by 9% as temperatures warmed in the Southeast. Natural gas export levels to Mexico were the same as last week, averaging 4.3 Bcf/d.

U.S. liquefied natural gas (LNG) exports remain flat week over week. Four vessels (LNG-carrying capacity 14.9 Bcf) departed the Sabine Pass liquefaction facility from March 15 to March 21. One vessel (LNG-carrying capacity 3.7 Bcf) was loading at the terminal on Wednesday.

Dominion Energy Cove Point’s first cargo, aboard the Gemmata (LNG-carrying capacity 3.0 Bcf), arrived at the Dragon LNG import terminal in the United Kingdom on March 21, according to Bloomberg. The Gemmata departed Cove Point on March 2.

more price data

Storage:

Working gas net withdrawals are 32 Bcf higher than the five-year average. Net withdrawals from storage totaled 86 Bcf for the week ending March 16, compared with the five-year (2013–17) average net withdrawal of 53 Bcf and last year's net withdrawals of 137 Bcf during the same week. Working gas stocks totaled 1,446 Bcf, which is 329 Bcf lower than the five-year average and 667 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 1,373 Bcf by March 31, 2018, which is 19% 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 $2.71/MMBtu, 3¢/MMBtu lower than the front-month futures price at the Nymex. A year ago, the spot price was 1¢/MMBtu 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 77 Bcf to 93 Bcf, with a median of 88 Bcf. Prices for the futures contract for April delivery at the Henry Hub were essentially unchanged at $2.66/MMBtu in two trades executed following the release of the Weekly Natural Gas Storage Report. Prices varied somewhat in subsequent trading and were between $2.65/MMBtu and $2.67/MMBtu.

Temperaturesare normal during the storage week. Temperatures in the Lower 48 states averaged 43 degrees Fahrenheit (°F), the same as the normal and 3°F higher than last year at this time. The average temperature was the same as the prior storage week.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
15-Mar
Fri,
16-Mar
Mon,
19-Mar
Tue,
20-Mar
Wed,
21-Mar
Henry Hub
2.67
2.61
2.63
2.66
2.70
New York
2.81
2.84
2.88
3.84
2.90
Chicago
2.54
2.45
2.48
2.55
2.57
Cal. Comp. Avg.*
2.44
2.30
2.26
2.30
2.30
Futures ($/MMBtu)
April contract
2.681
2.688
2.651
2.675
2.638
May contract
2.712
2.716
2.678
2.704
2.667
*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: (3/15/18 - 3/21/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
89.3
88.8
80.3
Dry production
79.1
78.7
71.8
Net Canada imports
6.9
7.0
6.2
LNG pipeline deliveries
0.2
0.2
0.3
Total supply
86.2
85.9
78.3

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: (3/15/18 - 3/21/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
76.6
80.8
76.9
    Power
23.2
23.5
23.1
    Industrial
21.8
22.4
21.9
    Residential/commercial
31.7
34.9
31.9
Mexico exports
4.3
4.3
4.1
Pipeline fuel use/losses
6.7
7.1
6.8
LNG pipeline receipts
3.2
3.1
2.4
Total demand
90.8
95.3
90.2

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, March 16, 2018
Change from
 
last week
last year
Oil rigs
800
0.5%
26.8%
Natural gas rigs
189
0.5%
20.4%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, March 16, 2018
Change from
 
last week
last year
Vertical
57
-6.6%
-18.6%
Horizontal
865
2.0%
31.5%
Directional
68
-9.3%
11.5%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-03-16
2018-03-09
change
East
270
314
-44
Midwest
315
350
-35
Mountain
90
93
-3
Pacific
169
169
0
South Central
602
606
-4
Total
1,446
1,532
-86
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(3/16/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
317
-14.8
323
-16.4
Midwest
513
-38.6
391
-19.4
Mountain
137
-34.3
124
-27.4
Pacific
207
-18.4
216
-21.8
South Central
938
-35.8
721
-16.5
Total
2,113
-31.6
1,775
-18.5
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Mar 15)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
204
-6
-71
0
0
0
Middle Atlantic
215
19
-41
0
0
0
E N Central
203
-3
-66
0
0
0
W N Central
200
-5
-73
0
-1
0
South Atlantic
141
24
-16
6
-4
-4
E S Central
126
16
-27
0
-4
0
W S Central
51
-17
-20
9
-1
-1
Mountain
162
-1
62
0
-1
-9
Pacific
94
2
65
0
-1
0
United States
158
3
-20
2
-2
-1
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Mar 15, 2018

Mean Temperature (F) 7-Day Mean ending Mar 15, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Mar 15, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Mar 15, 2018

Source: NOAA National Weather Service