In the News:
Liquefied natural gas imports played a key role in reducing price spikes in New England this winter
During winter 2018–19, deliveries of liquefied natural gas (LNG) at regasification facilities played an important role in moderating natural gas prices in New England. LNG deliveries (or sendout) from the regional regasification facilities generally increased in response to spot natural gas prices at the Algonquin Citygate—a widely referenced trading hub and benchmark for natural gas prices in New England—especially during peak demand periods in January and February.
Historically, spot natural gas prices in New England reflected higher prices and increased price volatility during winter months, when cold weather contributed to rising regional natural gas demand and more congestion on the natural gas pipeline network. During these conditions, LNG becomes a key marginal source of natural gas supply because New England lacks underground storage infrastructure and is not a natural gas-producing region.
In winter 2017–18, spot natural gas prices at Algonquin Citygate increased to $78.98 per million British thermal units (MMBtu) as the weather became extremely cold during the first week of January 2018. During the winter 2018–19, however, the timing of additional incremental natural gas supply provided by LNG imports played an important role in moderating price spikes. Despite periods of similarly cold weather, prices at Algonquin Citygate peaked at $13.56 per million British thermal units (MMBtu) in January and averaged about $7.00/MMBtu in January–February, compared to a 5-year average of $12.70/MMBtu for these months in 2014–18.
In winter of 2018–19, in addition to nine LNG cargoes received by the Everett LNG terminal in Massachusetts from December through February, Northeast Gateway Deepwater Port, located offshore from Boston, also received two cargoes—on January 1 and on January 29, 2019—according to the U.S. Department of Energy LNG imports data. These shipments were the first LNG cargoes received by the facility since February 2016.
Natural gas sendout from the Northeast Gateway contributed about 0.5 Bcf/d of additional natural gas on days of peak demand when prices at the Algonquin Citygate were the highest, effectively moderating daily spot prices. The combined sendout from the Northeast Gateway and Everett terminals averaged 0.7 Bcf/d in mid- and late-January and reached an all-time record of 0.83 Bcf/d on February 1, 2019―0.5 Bcf/d higher than the 0.31 Bcf/d peak sendout for the same period a year earlier, in December 2017–February 2018.
The Canaport LNG import terminal in New Brunswick, Canada, also contributed to meeting peak demand in New England this winter by increasing LNG sendout on the days of the highest spot prices at the Algonquin Citygate. The sendout at the terminal averaged 0.69 Bcf/d on January 20–21 and 0.77 Bcf/d in late-January 2019, compared to 0.59 Bcf/d peak sendout in January 2018.
In the next few years, several pipeline expansion projects under construction in New England, New York, and New Jersey will increase pipeline capacity once completed and likely alleviate some of the existing constraints on the pipeline network in New England. Phase II of the Algonquin Atlantic Bridge project will add 93 MMcf/d of additional pipeline capacity to the Boston-area pipeline system and is due online in the winter of 2020–21.
Overview:
(For the week ending Wednesday, April 17, 2019)
- Although natural gas spot prices fell at most locations this report week (Wednesday, April 3 to Wednesday, April 10), Henry Hub spot prices rose from $2.67 per million British thermal units (MMBtu) last Wednesday to $2.69/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the May 2019 contract increased 2¢, from $2.677/MMBtu last Wednesday to $2.700/MMBtu yesterday. The price of the 12-month strip averaging May 2019 through April 2020 futures contracts climbed 3¢/MMBtu to $2.876/MMBtu.
- Net injections to working gas totaled 25 Bcf for the week ending April 5. Working natural gas stocks are 1,155 Bcf, which is 14% lower than the year-ago level and 30% lower than the five-year (2014–18) average for this week.
- According to Baker Hughes, for the week ending Tuesday, April 2, the natural gas rig count increased by 4 to 194. The number of oil-directed rigs rose by 15 to 831. The total rig count increased by 19, and it now stands at 1,025.
Prices/Supply/Demand:
Henry Hub and Chicago Citygate prices rise slightly while most other prices fall. This report week (Wednesday, April 3 to Wednesday, April 10), temperatures across the Lower 48 states were warmer than normal, despite a blizzard that set in across the Midwest on the last day of the report week. Henry Hub spot prices traded within a narrow range and rose 2¢ from $2.67/MMBtu last Wednesday to $2.69/MMBtu yesterday. At the Chicago Citygate, prices increased 4¢ from $2.58/MMBtu last Wednesday to $2.62/MMBtu yesterday.
California prices fall with decreased demand. Seasonal temperatures drove weekly demand down by 0.4 Bcf/d (5%) in the Pacific region, according to PointLogic Energy. Prices at PG&E Citygate in Northern California fell 40¢, down from $3.71/MMBtu last Wednesday to $3.31/MMBtu yesterday. Prices at SoCal Citygate decreased with warmer temperatures from $1.17 from $3.91/MMBtu last Wednesday to a weekly low of $2.74/MMBtu yesterday.
Northeast prices show little movement. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 2¢ from $2.70/MMBtu last Wednesday to $2.72/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 6¢ from $2.61/MMBtu last Wednesday to $2.55/MMBtu yesterday.
Tennessee Zone 4 Marcellus spot prices decreased 6¢ from $2.45/MMBtu last Wednesday to $2.39/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 2¢ from $2.46/MMBtu last Wednesday to $2.44/MMBtu yesterday.
Waha prices recover throughout the week, returning to positive territory. Prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged a historical low of -$5.75/MMBtu last Wednesday, $8.42/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub averaged $0.25/MMBtu, $2.44/MMBtu lower than Henry Hub prices. Prices rose as the force majeure in El Paso was lifted as the Natural Gas Pipeline’s Lordsburg compressor station came back online on March 30; however, planned maintenance through April 18 on the Transwestern pipeline is expected to reduce takeaway capacity and continue putting downward pressure on Waha Hub prices.
As reported last week, natural gas prices in the West Texas region have been depressed since 2017 because pipeline takeaway capacity has struggled to keep up with increasing production of associated-dissolved natural gas. Recent reductions in capacity have exacerbated this already constrained takeaway capacity, and spring temperatures are expected to reduce local demand of natural gas.
Supply falls. 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 decreased by 1% compared with the previous report week. Average net imports from Canada decreased by 1% from last week.
Demand falls, driven by residential and commercial sectors. Total U.S. consumption of natural gas fell by 10% compared with the previous report week, according to data from PointLogic Energy. Decreases were largest in the residential and commercial sectors, where consumption declined by 25%. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption decreased by 5% week over week. Natural gas exports to Mexico decreased 1%.
U.S. liquefied natural gas (LNG) exports decrease week over week. Five LNG vessels (three from Sabine Pass and two from Cove Point) with a combined LNG-carrying capacity of 17.8 Bcf departed the United States from April 4 to April 10, according to shipping data compiled by Bloomberg. One vessel was loading at the Sabine Pass terminal on Wednesday.
On April 9, the Federal Energy Regulatory Commission (FERC) authorized Cameron LNG to introduce hazardous fluids to commission Train 1. Train 1 is expected to enter service in the second quarter of 2019.
Storage:
Net injections into storage totaled 25 Bcf for the week ending April 5, compared with the five-year (2014–18) average net injections of 5 Bcf and last year's net withdrawals of 20 Bcf during the same week. Working gas stocks totaled 1,155 Bcf, which is 485 Bcf lower than the five-year average and 183 Bcf lower than last year at this time.
According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas stocks ranged from net injections of 17 Bcf to 45 Bcf, with a median estimate of 34 Bcf.
More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.
See also:
| Spot Prices ($/MMBtu) | Thu, 11-Apr |
Fri, 12-Apr |
Mon, 15-Apr |
Tue, 16-Apr |
Wed, 17-Apr |
|---|---|---|---|---|---|
| Henry Hub |
2.69 |
2.69 |
2.61 |
2.60 |
2.56 |
| New York |
2.43 |
2.33 |
2.51 |
2.46 |
2.35 |
| Chicago |
2.59 |
2.54 |
2.48 |
2.50 |
2.40 |
| Cal. Comp. Avg.* |
2.65 |
2.48 |
1.89 |
2.34 |
2.28 |
| Futures ($/MMBtu) | |||||
| May contract | 2.664 |
2.660 |
2.590 |
2.572 |
2.517 |
| June contract |
2.708 |
2.704 |
2.633 |
2.617 |
2.559 |
| *Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg. | |||||
| Sources: Natural Gas Intelligence and CME Group as compiled by Bloomberg, L.P. | |||||
| U.S. natural gas supply - Gas Week: (4/11/19 - 4/17/19) | |||
|---|---|---|---|
Average daily values (Bcf/d): |
|||
this week |
last week |
last year |
|
| Marketed production | 100.0 |
99.5 |
90.0 |
| Dry production | 89.4 |
88.9 |
80.1 |
| Net Canada imports | 5.1 |
5.0 |
5.8 |
| LNG pipeline deliveries | 0.1 |
0.1 |
0.1 |
| Total supply | 94.5 |
93.9 |
85.9 |
|
Source: OPIS PointLogic Energy, an IHS Company | |||
| U.S. natural gas consumption - Gas Week: (4/11/19 - 4/17/19) | |||
|---|---|---|---|
Average daily values (Bcf/d): |
|||
this week |
last week |
last year |
|
| U.S. consumption | 62.8 |
62.6 |
68.2 |
| Power | 22.2 |
22.8 |
23.0 |
| Industrial | 20.7 |
20.4 |
21.4 |
| Residential/commercial | 19.9 |
19.5 |
23.9 |
| Mexico exports | 4.5 |
4.7 |
4.4 |
| Pipeline fuel use/losses | 6.0 |
6.0 |
5.7 |
| LNG pipeline receipts | 4.8 |
3.2 |
3.4 |
| Total demand | 78.1 |
76.5 |
81.8 |
|
Source: OPIS PointLogic Energy, an IHS Company | |||
| Rigs | |||
|---|---|---|---|
Tue, April 09, 2019 |
Change from |
||
last week |
last year |
||
| Oil rigs | 833 |
0.2% |
2.2% |
| Natural gas rigs | 189 |
-2.6% |
-1.6% |
| Note: Excludes any miscellaneous rigs | |||
| Rig numbers by type | |||
|---|---|---|---|
Tue, April 09, 2019 |
Change from |
||
last week |
last year |
||
| Vertical | 55 |
1.9% |
0.0% |
| Horizontal | 889 |
-1.3% |
0.7% |
| Directional | 78 |
11.4% |
11.4% |
| Source: Baker Hughes Inc. | |||
| Working gas in underground storage | ||||
|---|---|---|---|---|
Stocks billion cubic feet (Bcf) |
||||
| Region | 2019-04-12 |
2019-04-05 |
change |
|
| East | 228 |
209 |
19 |
|
| Midwest | 254 |
240 |
14 |
|
| Mountain | 66 |
64 |
2 |
|
| Pacific | 128 |
119 |
9 |
|
| South Central | 571 |
523 |
48 |
|
| Total | 1,247 |
1,155 |
92 |
|
|
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report | ||||
| Working gas in underground storage | |||||
|---|---|---|---|---|---|
Historical comparisons |
|||||
Year ago (4/12/18) |
5-year average (2014-2018) |
||||
| Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
| East | 208 |
9.6 |
264 |
-13.6 |
|
| Midwest | 231 |
10.0 |
332 |
-23.5 |
|
| Mountain | 83 |
-20.5 |
115 |
-42.6 |
|
| Pacific | 174 |
-26.4 |
211 |
-39.3 |
|
| South Central | 608 |
-6.1 |
739 |
-22.7 |
|
| Total | 1,304 |
-4.4 |
1,661 |
-24.9 |
|
| Source: Form EIA-912, Weekly Underground Natural Gas Storage Report | |||||
| Temperature – heating & cooling degree days (week ending Apr 11) | ||||||||
|---|---|---|---|---|---|---|---|---|
HDD deviation from: |
CDD deviation from: |
|||||||
| Region | HDD Current |
normal |
last year |
CDD Current |
normal |
last year |
||
| New England | 157 |
7 |
-37 |
0 |
0 |
0 |
||
| Middle Atlantic | 109 |
-24 |
-82 |
0 |
0 |
0 |
||
| E N Central | 91 |
-46 |
-103 |
0 |
0 |
0 |
||
| W N Central | 94 |
-37 |
-114 |
0 |
-1 |
0 |
||
| South Atlantic | 33 |
-36 |
-82 |
29 |
16 |
11 |
||
| E S Central | 21 |
-42 |
-93 |
13 |
8 |
13 |
||
| W S Central | 9 |
-22 |
-42 |
37 |
21 |
29 |
||
| Mountain | 97 |
-27 |
-36 |
7 |
1 |
5 |
||
| Pacific | 57 |
-15 |
-6 |
0 |
-2 |
0 |
||
| United States | 74 |
-30 |
-68 |
11 |
6 |
6 |
||
|
Note: HDD = heating degree day; CDD = cooling degree day Source: National Oceanic and Atmospheric Administration | ||||||||
Average temperature (°F)
7-day mean ending Apr 11, 2019
Source: National Oceanic and Atmospheric Administration
Deviation between average and normal (°F)
7-day mean ending Apr 11, 2019
Source: National Oceanic and Atmospheric Administration
