In the News:
EIA projects growth in natural gas liquids feedstock consumption in the bulk chemicals industry
In our recently-released Annual Energy Outlook 2022 (AEO2022), the Reference case projects growth in total consumption of natural gas liquids (NGLs) as feedstocks in the bulk chemicals industry through 2050. The AEO2022 Reference case includes our baseline assumptions about technology, policy, and the economy through 2050. Ethane is the most consumed NGL feedstock throughout the projection period, and in the near term, our Short-Term Energy Outlook forecasts ethane consumption growth will exceed that of all other petroleum products through 2023.
Ethane is converted to ethylene—a key precursor for producing polymers and other chemical products—in a process known as cracking. U.S. ethylene cracking capacity has nearly doubled over the past decade, and the AEO2022 Reference case projects this trend will continue. U.S. ethane consumption is projected to reach 3.1 quadrillion British thermal units (quads) annually in 2050, compared with 1.8 quads in 2021.
Starting in 2032, ethane demand for the production of ethylene exceeds U.S. production of ethane. As a result, U.S. ethane exports (which are projected to peak in 2023 at 470,000 barrels per day) gradually decline throughout the projection period. Propane and butanes produced in the United States are also used to meet ethylene feedstock demand, further increasing the domestic consumption of those NGLs (and also decreasing their respective export levels).
Naphtha is another feedstock option for producing ethylene. In the Reference case, naphtha consumed as a feedstock for ethylene production is projected to remain at a constant level. As U.S. ethane production grew and the price of ethane fell in the 2010s, dedicated ethane crackers were built and some naphtha crackers were modified to accept ethane as a feedstock. These modified crackers can now switch between cracking ethane, other NGLs, and naphtha based on market conditions. In the Reference case, these flexible crackers crack only ethane and minor quantities of other NGLs.
Overview:
(For the week ending Wednesday, March 30, 2022)
- Spot Prices: Natural gas spot prices rose at most locations this report week (Wednesday, March 23 to Wednesday, March 30). The Henry Hub spot price rose from $5.26 per million British thermal units (MMBtu) last Wednesday to $5.34/MMBtu yesterday.
- International Spot Prices: Bloomberg Finance, L.P. reports that swap prices for liquefied natural gas (LNG) cargoes in East Asia fell $1.14/MMBtu to a weekly average of $34.41/MMBtu. At the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, the day-ahead prices rose $1.85 to a weekly average of $34.66/MMBtu. TTF prices averaged higher than East Asia spot prices for the first time since early March as concerns about natural gas imports from Russia resulted in higher prices to attract flexible LNG cargoes. In the same week last year (week ending March 31, 2021), prices in East Asia and at TTF were $6.82/MMBtu and $6.38/MMBtu, respectively.
- Futures: The April 2022 NYMEX contract expired Tuesday at $5.336/MMBtu, up 10 cents from last Wednesday. The May 2022 NYMEX contract price increased to $5.605/MMBtu, up 33 cents from last Wednesday to yesterday. The price of the 12-month strip averaging May 2022 through April 2023 futures contracts climbed 32 cents to $5.561/MMBtu.
- Storage: The net injections to working gas totaled 26 billion cubic feet (Bcf) for the week ending March 25. Working natural gas stocks totaled 1,415 Bcf, which is 20% lower than the year-ago level and 15% lower than the five-year (2017–2021) average for this week.
- NGPLs: The natural gas plant liquids (NGPLs) composite price at Mont Belvieu, Texas, rose by 30 cents/MMBtu, averaging $13.12/MMBtu for the week ending March 30. Natural gas prices at the Houston Ship Channel increased by 13%, while the ethane price remained relatively unchanged. The ethane premium to natural gas narrowed by 57 cents/MMBtu (26%). The price of ethylene decreased by 4%, narrowing the premium to ethane by 7% week over week. The Brent crude oil price decreased by 1%. Low end-of season inventories and continuing strong demand led heavier NGPL prices to rise. The propane price rose 3%, normal butane and isobutane prices rose 1% and 2%, respectively, and the natural gasoline price rose 5%. The propane discount to crude oil narrowed by 14%.
- Rigs: According to Baker Hughes, for the week ending Tuesday, March 22, the natural gas rig count was flat from a week ago at 137 rigs. The Marcellus and an unspecified location each added one rig, and the Eagle Ford and the Utica dropped one rig each. The number of oil-directed rigs increased by 7 to 531 rigs. The Permian and unspecified locations gained three rigs each; one rig each was added in the Granite Wash, the Haynesville, and the Williston; two rigs were added in the Eagle Ford; and four rigs were dropped in the Cana Woodford. The total rig count now stands at 670, the highest level since March 27, 2020, and 253 rigs more than the same week last year.
Prices/Supply/Demand:
Prices along the Gulf Coast rise in response to warming weather. This report week (Wednesday, March 23 to Wednesday, March 30), the Henry Hub spot price rose 8 cents from $5.26/MMBtu last Wednesday to $5.34/MMBtu yesterday, after reaching a high mid-week of $5.49/MMBtu Friday. Prices along the Gulf Coast and Southeast were higher this report week. Temperatures along the Gulf Coast were lower than normal at the start of the report week, but since Friday increased above normal for this time of year. In Houston, Texas, the weekly average temperature was 69°F, which was 3°F higher than normal, leading to 8 heating degree days (HDDs) and 36 cooling degree days (CDDs). Natural gas consumption for electric power generation in South Texas and South Louisiana increased by 0.3 Bcf/d (9%) this report week, while consumption in the residential and commercial sectors declined by over 0.1 Bcf/d (20%), according to data from PointLogic. Feedgas deliveries to LNG export terminals along the Gulf Coast increased by 0.3 billion cubic feet per day (Bcf/d) to 12.0 Bcf/d this report week, due to increased deliveries to terminals in South Texas.
Prices in the Midwest rise in response to colder-than-normal temperatures. At the Chicago Citygate, the price increased 39 cents from $4.75/MMBtu last Wednesday to $5.14/MMBtu yesterday, after reaching a mid-week high of $5.19/MMBtu on Friday, prior to abnormally cold temperatures through the weekend. Temperatures in the Chicago area averaged 37°F over the course of the report week, 6°F below normal, resulting in a 3.2 Bcf/d increase in residential and commercial consumption of natural gas, according to data from PointLogic. From Sunday to Monday, temperatures fell to a nighttime low of 22°F, almost 14°F lower than normal. Temperatures are expected to drop again over the weekend.
Prices in the West increase in line with the general trend in prices across the United States. The price at PG&E Citygate in Northern California rose 51 cents, up from $5.54/MMBtu last Wednesday to $6.05/MMBtu yesterday, after reaching a high of $6.12/MMBtu on Monday. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, rose 29 cents from $4.56/MMBtu last Wednesday to $4.85/MMBtu yesterday. The price at Sumas on the Canada-Washington border, the main pricing point for the Pacific Northwest, rose 22 cents from $4.33/MMBtu last Wednesday to $4.55/MMBtu yesterday. The temperatures in Seattle, Washington averaged 51°F this report week, which is 3°F higher than normal for this time of year. The temperatures in Riverside, California, inland from Los Angeles, averaged 65°F, which is 4°F higher than normal. The price at SoCal Citygate in Southern California increased 33 cents from $4.75/MMBtu last Wednesday to $5.08/MMBtu yesterday.
Prices across the Northeast are mixed but remain elevated as a brief cold snap moves into the region increasing natural gas demand. At the Algonquin Citygate, which serves Boston-area consumers, the price went down 17 cents from $4.96/MMBtu last Wednesday to $4.79/MMBtu yesterday. The Algonquin Citygate price reached a high of $12.73/MMBtu on Monday as a period of below-normal temperatures moved into the region. Temperatures on Monday and Tuesday in the Boston area were approximately 14°F below normal, which resulted in 28 more HDDs than is normal for this time of year. Natural gas consumption in the residential and commercial sectors in the Northeast increased by 6.0 Bcf/d (88%) week over week to an average of 12.9 Bcf/d, according to data from PointLogic. In New England, oil-fired electricity generation increased from zero to 2.5% of generation on Tuesday, displacing some natural gas-fired electricity generation, which decreased to 41.5% from 47.1% of generation capacity the day before. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 19 cents from $4.42/MMBtu last Wednesday to $4.61/MMBtu yesterday. Temperatures on Monday and Tuesday in the New York City area were approximately 17°F below normal, which resulted in 35 more HDDs than is normal for this time of year. Natural gas consumption in the New York and New Jersey area increased by 2.6 Bcf/d (54%) to an average 7.4 Bcf/d this week, according to data from PointLogic.
Prices in the Appalachia production region rise in response to increased demand due to colder-than-normal temperatures. The Tennessee Zone 4 Marcellus spot price increased 16 cents from $4.33/MMBtu last Wednesday to $4.49/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania rose 21 cents from $4.38/MMBtu last Wednesday to $4.59/MMBtu yesterday. Natural gas consumption in the Appalachia area increased by 3.0 Bcf/d (41%) to an average 10.3 Bcf/d this week, according to data from PointLogic. Net natural gas flows out of the region rose this week, led by an increase in flows of 2.1 Bcf/d (27%) to the New York and New Jersey area, which also experienced colder-than-normal temperatures.
Prices in the Permian production region fall as the Henry Hub price rises, resulting in a wider discount to Henry Hub. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, fell 38 cents this report week, from $4.40/MMBtu last Wednesday to $4.02/MMBtu yesterday. The Waha Hub traded $1.32 below the Henry Hub price yesterday, compared with last Wednesday when it traded 86 cents below the Henry Hub price. According to data from PointLogic, natural gas production in the Permian Basin was flat week over week at 14.6 Bcf/d, as were net natural gas flows out of the region at 13.4 Bcf/d.
U.S. average natural gas supply rises from all supply sources this week. The average total supply of natural gas rose by 1.2% (1.2 Bcf/d) compared with the previous report week, according to data from PointLogic. All major sources showed increases as dry natural gas production grew by 0.1% (0.1 Bcf/d) compared with the previous report week. Average net imports from Canada increased by 25.5% (1.1 Bcf/d) from last week to meet increased demand for natural gas for space heating in the Northeast and the Midwest
U.S. total consumption of natural gas increases substantially this week. Total U.S. consumption of natural gas rose across all major consumption sectors by 15.0% (10.4 Bcf/d) compared with the previous report week, according to data from PointLogic. Natural gas consumption in the residential and commercial sectors increased the most this report week, rising by 39.2% (8.4 Bcf/d) as average daytime temperatures across the eastern United States were colder than normal for this time of year, according to data from NOAA. Natural gas consumed for power generation rose by 4.9% (1.2 Bcf/d) week over week and industrial sector consumption increased by 3.4% (0.8 Bcf/d). Natural gas exports to Mexico decreased 3.8% (0.2 Bcf/d) and natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 13.2 Bcf/d, or 0.3 Bcf/d higher than last week.
U.S. LNG exports increase by two vessels this week from last week. Twenty-five LNG vessels (eight from Sabine Pass, five from Freeport, four from Corpus Christi, three from Cameron, two each from Calcasieu Pass and Cove Point, and one from Elba Island) with a combined LNG-carrying capacity of 93 Bcf departed the United States between March 24 and March 30, according to shipping data provided by Bloomberg Finance, L.P.
Storage:
The net injections into storage totaled 26 Bcf for the week ending March 25, compared with the five-year (2017–2021) average net withdrawals of 23 Bcf and last year's net injections of 7 Bcf during the same week. Working natural gas stocks totaled 1,415 Bcf, which is 244 Bcf lower than the five-year average and 347 Bcf lower than last year at this time.
According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 14 Bcf to 45 Bcf, with a median estimate of 26 Bcf.
The average rate of withdrawals from storage is 7% higher than the five-year average up to this point in the withdrawal season (November through March). If the rate of withdrawals from storage matched the five-year average of 1.1 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,422 Bcf on March 31, which is 244 Bcf lower than the five-year average of 1,666 Bcf for that time of year.
More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.
See also:
Source: U.S. Energy Information Administration, Annual Energy Outlook 2022
| Spot Prices ($/MMBtu) | Thu, 24-Mar |
Fri, 25-Mar |
Mon, 28-Mar |
Tue, 29-Mar |
Wed, 30-Mar |
|---|---|---|---|---|---|
| Henry Hub | 5.17 | 5.49 | 5.44 | 5.31 | 5.34 |
| New York | 4.38 | 5.24 | 5.66 | 4.86 | 4.61 |
| Chicago | 4.81 | 5.19 | 5.14 | 5.01 | 5.14 |
| Cal. Comp. Avg.* | 4.87 | 5.17 | 5.21 | 5.07 | 5.27 |
| Futures ($/MMBtu) | |||||
| April Contract | 5.401 | 5.571 | 5.508 | 5.336 | Expired |
| May Contract | 5.446 | 5.611 | 5.538 | 5.330 | 5.605 |
| June Contract | 5.487 | 5.651 | 5.582 | 5.381 | 5.658 |
| *Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg. | |||||
| Source: NGI's Daily Gas Price Index | |||||
| U.S. natural gas supply - Gas Week: (3/24/22 - 3/30/22) | |||
|---|---|---|---|
Average daily values (billion cubic feet) |
|||
this week |
last week |
last year |
|
| Marketed production | 106.4 |
106.3 |
103.6 |
| Dry production | 94.1 |
94.0 |
91.3 |
| Net Canada imports | 5.4 |
4.3 |
4.3 |
| LNG pipeline deliveries | 0.1 |
0.1 |
0.1 |
| Total supply | 99.6 |
98.4 |
95.7 |
|
Source: Chart by the U.S. Energy Information Administration (EIA), based on data from PointLogic | |||
| U.S. natural gas consumption - Gas Week: (3/24/22 - 3/30/22) | |||
|---|---|---|---|
Average daily values (billion cubic feet) |
|||
this week |
last week |
last year |
|
| U.S. consumption | 79.6 |
69.2 |
67.9 |
| Power | 26.2 |
25.0 |
23.6 |
| Industrial | 23.7 |
22.9 |
21.8 |
| Residential/commercial | 29.7 |
21.4 |
22.5 |
| Mexico exports | 4.4 |
4.5 |
6.1 |
| Pipeline fuel use/losses | 6.7 |
6.5 |
6.3 |
| LNG pipeline receipts | 13.2 |
12.9 |
11.6 |
| Total demand | 103.9 |
93.1 |
91.9 |
|
Source: Chart by the U.S. Energy Information Administration (EIA), based on data from PointLogic | |||
| Rigs | |||
|---|---|---|---|
Tue, March 22, 2022 |
Change from |
||
last week |
last year |
||
| Oil rigs | 531 |
1.3% |
63.9% |
| Natural gas rigs | 137 |
0.0% |
48.9% |
| Note: Excludes any miscellaneous rigs | |||
| Rig numbers by type | |||
|---|---|---|---|
Tue, March 22, 2022 |
Change from |
||
last week |
last year |
||
| Vertical | 25 |
19.0% |
13.6% |
| Horizontal | 610 |
0.7% |
60.5% |
| Directional | 35 |
-2.8% |
133.3% |
| Source: Chart by the U.S. Energy Information Administration (EIA), based on data from Baker Hughes Company | |||
| Working gas in underground storage | ||||
|---|---|---|---|---|
Stocks billion cubic feet (Bcf) |
||||
| Region | 2022-03-25 |
2022-03-18 |
change |
|
| East | 268 |
268 |
0 |
|
| Midwest | 317 |
318 |
-1 |
|
| Mountain | 89 |
87 |
2 |
|
| Pacific | 161 |
157 |
4 |
|
| South Central | 581 |
559 |
22 |
|
| Total | 1,415 |
1,389 |
26 |
|
|
Source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report | ||||
| Working gas in underground storage | |||||
|---|---|---|---|---|---|
Historical comparisons |
|||||
Year ago (3/25/21) |
5-year average (2017-2021) |
||||
| Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
| East | 307 |
-12.7 |
285 |
-6.0 |
|
| Midwest | 402 |
-21.1 |
378 |
-16.1 |
|
| Mountain | 112 |
-20.5 |
99 |
-10.1 |
|
| Pacific | 194 |
-17.0 |
175 |
-8.0 |
|
| South Central | 747 |
-22.2 |
721 |
-19.4 |
|
| Total | 1,762 |
-19.7 |
1,659 |
-14.7 |
|
| Source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report | |||||
| Temperature – heating & cooling degree days (week ending Mar 24) | ||||||||
|---|---|---|---|---|---|---|---|---|
HDDs |
CDDs |
|||||||
| Region | Current total |
Deviation from normal |
Deviation from last year |
Current total |
Deviation from normal |
Deviation from last year |
||
| New England | 135 |
-54 |
-27 |
0 |
0 |
0 |
||
| Middle Atlantic | 112 |
-62 |
-38 |
0 |
0 |
0 |
||
| E N Central | 126 |
-56 |
-1 |
0 |
0 |
0 |
||
| W N Central | 148 |
-32 |
8 |
0 |
-1 |
0 |
||
| South Atlantic | 57 |
-42 |
-32 |
18 |
6 |
8 |
||
| E S Central | 66 |
-28 |
-4 |
0 |
-5 |
0 |
||
| W S Central | 57 |
2 |
-6 |
5 |
-8 |
0 |
||
| Mountain | 149 |
-1 |
-12 |
1 |
-2 |
1 |
||
| Pacific | 56 |
-31 |
-49 |
0 |
-1 |
0 |
||
| United States | 99 |
-38 |
-19 |
4 |
-1 |
2 |
||
|
Source: Chart by the U.S. Energy Information Administration (EIA), based on data from the National Oceanic and Atmospheric Administration Note: HDDs=heating degree days; CDDs=cooling degree days | ||||||||
Average temperature (°F)
7-day mean ending Mar 24, 2022
Source: National Oceanic and Atmospheric Administration Note: Image is not available.
Deviation between average and normal (°F)
7-day mean ending Mar 24, 2022
Source: National Oceanic and Atmospheric Administration Note: Image is not available.
