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Natural Gas Weekly Update

for week ending July 11, 2018   |  Release date:  July 12, 2018   |  Next release:  July 19, 2018   |   Previous weeks


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

In the News:

Two more pipelines transporting U.S. natural gas within Mexico are placed in service

In June, two new pipelines carrying U.S. natural gas exports within Mexico were placed in service: the Nueva Era pipeline system, which includes the Impulsora pipeline in southern Texas and transports natural gas from the Eagle Ford producing basin to Monterrey, Nuevo León; and the El Encino-Topolobampo pipeline, which transports natural gas from the Permian producing basin in western Texas from interconnections with existing pipelines (Ojinaga-El Encino and Tarahumara) further into Mexico’s northwestern states of Sonora and Sinaloa.

The Nueva Era pipeline is a 504 million cubic feet per day (MMcf/d)-capacity pipeline that will primarily serve the industrial customers and several natural gas-fired power plants near Monterrey, Nuevo León. These plants include:

El Encino-Topolobampo pipeline has a capacity of 670 MMcf/d and is part of a two-segment El Encino-Mazatlan system. El Encino-Topolobampo transports natural gas from central Mexico’s state of Chihuahua to Topolobampo, state of Sinaloa in the western part of the country. The second segment—an existing El Oro-Mazatlan pipeline—transports natural gas farther south into Sinaloa. El Encino-Topolobampo will deliver natural gas to an existing 320 MW Juan de Dios Batiz Paredez plant and to two new CCGT plants, Topolobampo II (778 MW) and Topolobampo III (777 MW), scheduled to come online sometime in 2019–20. The El Oro-Mazatlan segment will supply natural gas to the 300 MW Mazatlan II power plant. El Encino-Topolobampo will also supply natural gas to Guaymas-El Oro pipeline and two CCGT power plants—Empalme I and II (capacity 747 MW each).

U.S. natural gas pipeline exports to Mexico have increased following major expansions of U.S. border crossing capacity in recent years. In particular, capacity from West Texas has increased by 3.1 billion cubic feet per day (Bcf/d)) since 2016. In addition, the recently approved expansion of Tennessee Gas Pipeline’s border crossing export points at Hidalgo and Rio Bravo in south Texas will increase capacity by an additional 0.4 Bcf/d. However, despite this significant increase in U.S. border crossing pipeline capacity, exports from western Texas (Waha-Permian production areas) averaged 0.6 Bcf/d in January-April 2018 (export capacity utilization around 14%) because of the delays in construction of the connecting pipelines on the Mexican domestic network.

In the near term, EIA forecasts that U.S. natural gas exports to Mexico will increase, as more connecting pipelines in Mexico are completed. Currently, there are six major pipelines under construction in Mexico identified as strategic pipelines in Mexico’s five-year natural gas infrastructure expansion plan, which are scheduled to come online this year, according to Mexico’s Secretaría de Energía. These pipelines will transport U.S. natural gas further into Mexico’s northwestern and central regions (see map). However, since the originally planned in-service dates, Mexican pipeline projects have been delayed on average one year or more, according to Genscape, in part because of the opposition from Mexico’s indigenous tribes contesting the pipelines’ chosen routes.

Overview:

(For the Week Ending Wednesday, July 11, 2018)

  • Natural gas spot price movements followed temperatures at most locations this report week (Wednesday, July 4 to Wednesday, July 11). The Henry Hub spot price fell from $2.87 per million British thermal units (MMBtu) last Wednesday to $2.84/MMBtu yesterday. The average price for the week decreased 6¢, from $2.91/MMBtu last report week to $2.85/MMBtu this report week.
  • At the New York Mercantile Exchange (Nymex), the August 2018 contact price decreased to $2.82/MMBtu, down 1¢ from last Thursday (Wednesday, July 4 was a holiday).
  • Net injections into working gas totaled 51 billion cubic feet (Bcf) for the week ending July 6. Working natural gas stocks are 2,203 Bcf, which is 25% 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 30¢, averaging $9.15/MMBtu for the week ending July 11. The price of isobutane fell by 5%. The price of ethane, propane, and butane rose by 8%, 5%, and 7%, respectively. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, July 3, the natural gas rig count remained flat at 187. The number of oil-directed rigs rose by 5 to 863. The total rig count increased by 5, and it now stands at 1,052.

more summary data

Prices/Supply/Demand:

National benchmark spot price decreases with cooler temperatures over the eastern United States. This report week (Wednesday, July 4 to Wednesday, July 11), the Henry Hub spot price fell 3¢ from $2.87/MMBtu last Wednesday to $2.84/MMBtu yesterday while the average price for the week decreased 6¢, from $2.91/MMBtu last report week to $2.85/MMBtu this report week. After record-high temperatures were experienced in the Northeast and Midwest last report week, temperatures in most of the Lower 48 states decreased by as much as 15°F degrees Fahrenheit (°F), reducing natural gas demand for electric power generation for air conditioning.

Key Midwest trading hub price decreases. At the Chicago Citygate, prices decreased 1¢ from $2.76/MMBtu last Wednesday to $2.75/MMBtu yesterday. The average price for the week decreased 12¢, from $2.80/MMBtu last report week to $2.68/MMBtu this report week.

California prices increase. The price at SoCal Citygate increased $1.16 from $3.44/MMBtu last Wednesday to $4.60/MMBtu yesterday. Prices on July 5 reached $8.28/MMBtu in anticipation of record-high temperatures in Southern California. The California Border Average price increased $1.00 from $2.54/MMBtu last Wednesday to $3.54/MMBtu yesterday.

Northeast prices decrease with cooler temperatures. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 48¢ from $3.18/MMBtu last Wednesday to $2.70/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 14¢ from $3.06/MMBtu last Wednesday to $2.92/MMBtu yesterday. Temperatures in the Northeast were lower this report week following unseasonably high temperatures the previous report week, which reduced the need for air conditioning. According to the S&P Global Platts Northeast Observer, average power demand for the report week decreased 14% from last report week.

Appalachian prices decrease. Tennessee Zone 4 Marcellus spot prices decreased 8¢ from $2.17/MMBtu last Wednesday to $2.09/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 17¢ from $2.34/MMBtu last Wednesday to $2.17/MMBtu yesterday.

Nymex futures decrease. At the Nymex, the August 2018 contract price decreased 1¢ from $2.84/MMBtu last Thursday, July 5, (July 4 was a holiday) to $2.83/MMBtu yesterday. The price of the 12-month strip averaging August 2018 through July 2019 futures contracts remained unchanged.

Overall supply decreases. According to data from PointLogic Energy, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week while average net imports from Canada decreased by 5% from last week.

Overall demand decreases. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 4% week over week, led by a 15% decrease in the Northeast. A 26% increase in power burn in the Western region was not enough to offset this decrease. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 9%. Natural gas exports to Mexico increased 3%.

U.S. LNG exports increase week over week. Six LNG vessels (combined LNG-carrying capacity 22.4 Bcf) departed the United States from July 5 through July 11 (four from the Sabine Pass liquefaction terminal and two from the Cove Point terminal).

Cheniere Energy, the developer of the Sabine Pass and Corpus Christi liquefaction terminals, received permission from the Federal Energy Regulatory Commission last week to start commissioning a fuel gas system at Corpus Christi Train 1 and introduce hot oil as part of the commissioning activities. Corpus Christi has two trains currently under construction (baseload capacity of each train is 0.6 Bcf/d). The third stage of the Corpus Christi expansion will consist of seven modular liquefaction trains and a storage tank. The third expansion stage received a Final Investment Decision in May, but it is not yet under construction. The first export cargo from Corpus Christi Train 1 is expected in October–November of this year, according to Bloomberg.

A full list of U.S. liquefaction facilities is available in EIA’s new database of liquefaction facilities.

Storage:

Working gas deficit to the five-year average grows. Net injections into storage totaled 51 Bcf for the week ending July 6, compared with the five-year (2013–17) average net injections of 77 Bcf and last year's net injections of 59 Bcf during the same week. Warmer-than-normal temperatures throughout the Lower 48 states contributed to increased power demand for natural gas for air conditioning, which reduced net injections into working gas. Working gas stocks totaled 2,203 Bcf, which is 519 Bcf lower than the five-year average and 725 Bcf lower than last year at this time.

Working gas stocks are on pace to end the refill season below the lower bound of the five-year range. Net injections into storage are 17% lower than the five-year average rate so far in the 2018 refill season. If working gas stocks match the five-year average rate of injections for the remainder of the refill season, inventories will total 3,296 Bcf on October 31, compared with the five-year low of 3,560 Bcf for that time of year. Working gas stocks are currently 150 Bcf higher than the bottom of the five-year range, but working gas stocks are 10 Bcf and 24 Bcf lower than the five-year range in the East and Midwest regions, respectively. The South Central region posted working gas stocks 161 Bcf higher than the bottom of the five-year range.

Despite relatively low storage inventories, the average January 2019 futures contract price trades at a lower premium to the average spot price than last year at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub averaged $2.88/MMBtu, and the Nymex futures price of natural gas for delivery in January 2019 averaged $3.09/MMBtu, 22¢/MMBtu higher than the spot price. A year ago, the January contract was 35¢/MMBtu higher than the spot price.

Reported net injections into storage are lower than the median of the range of analysts’ expections. According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas storage ranged from net injections of 42 Bcf to 63 Bcf, with a median estimate of 54 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report (WNGSR), the price of the Nymex futures contract for August delivery at the Henry Hub remained close to the pre-release level of $2.82/MMBtu with 101 trades executed. Trading activity increased somewhat in subsequent trading, but prices remained close to $2.82/MMBtu.

Temperatures are in the higher-than-normal range for the storage week. Temperatures in the Lower 48 states averaged 79 °F, 5°F higher than normal and 3°F higher than last year at this time. Temperatures were also 4°F higher than the level reported for the previous week.

more storage data

See also:

Map Sources: U.S. Energy Information Administration based on Mexico's Secretaría de Energía Status of Pipelines (in Spanish) and IHS Markit
ExportsSource: U.S. Energy Information Administration, Natural Gas Monthly


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
5-Jul
Fri,
6-Jul
Mon,
9-Jul
Tue,
10-Jul
Wed,
11-Jul
Henry Hub 2.86 2.85 2.86 2.84 2.84
New York 2.92 2.39 3.07 2.95 2.92
Chicago 2.70 2.61 2.69 2.72 2.75
Cal. Comp. Avg.* 3.00 2.77 3.04 2.86 3.00
Futures ($/MMBtu)
August Contract 2.837 2.86 2.828 2.788 2.829
September Contract 2.812 2.826 2.796 2.758 2.797
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Source: Natural Gas Intelligence
Spot Prices ($/MMBtu)
Thu,
28-Jun
Fri,
29-Jun
Mon,
2-Jul
Tue,
3-Jul
Wed,
4-Jul
Henry Hub 2.97 2.90 2.87 2.87 Holiday
New York 3.39 3.38 3.48 3.06 Holiday
Chicago 2.88 2.79 2.83 2.76 Holiday
Cal. Comp. Avg.* 2.61 2.57 2.62 2.61 Holiday
Futures ($/MMBtu)
August Contract 2.94 2.92 2.862 2.870 Holiday
September Contract 2.919 2.901 2.844 2.846 Holiday
*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: (7/5/18 - 7/11/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
92.1
92.3
81.1
Dry production
81.1
81.3
71.9
Net Canada imports
6.0
6.3
6.0
LNG pipeline deliveries
0.1
0.1
0.0
Total supply
87.1
87.7
78.0

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: (7/5/18 - 7/11/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
62.5
63.0
59.4
    Power
35.7
37.0
33.7
    Industrial
19.8
19.5
19.7
    Residential/commercial
7.1
6.5
6.0
Mexico exports
4.5
4.4
4.2
Pipeline fuel use/losses
6.7
6.9
6.4
LNG pipeline receipts
3.3
3.5
2.2
Total demand
77.0
77.8
72.2

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
Tue, July 03, 2018
Change from
 
last week
last year
Oil rigs
863
0.6%
13.1%
Natural gas rigs
187
0.0%
-1.1%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, July 03, 2018
Change from
 
last week
last year
Vertical
55
-1.8%
-25.7%
Horizontal
930
0.4%
15.7%
Directional
67
3.1%
-9.5%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-07-06
2018-06-29
change
East
480
460
20
Midwest
477
455
22
Mountain
143
139
4
Pacific
260
257
3
South Central
843
   841
2
Total
2,203
 2,152
51
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(7/6/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
585
-17.9
593
-19.1
Midwest
716
-33.4
642
-25.7
Mountain
192
-25.5
168
-14.9
Pacific
291
-10.7
305
-14.8
South Central
1,144
-26.3
1,014
-16.9
Total
2,928
-24.8
2,722
-19.1
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Jul 05)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
0
-2
-1
94
63
44
Middle Atlantic
0
-1
0
104
57
39
E N Central
0
-1
-1
102
53
49
W N Central
0
-4
-1
91
28
34
South Atlantic
0
0
0
111
20
8
E S Central
0
0
0
114
27
26
W S Central
0
0
0
136
19
15
Mountain
3
-7
1
77
6
-10
Pacific
3
-3
3
37
1
-9
United States
1
-2
0
96
30
21
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Jul 05, 2018

Mean Temperature (F) 7-Day Mean ending Jul 05, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Jul 05, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Jul 05, 2018

Source: NOAA National Weather Service