Natural gas market indicators

September 30, 2009 by Chris McGill · Leave a Comment
Filed under: Natural Gas

The recent increase in natural gas prices has some analysts pointing to a turnaround in fundamentals. However, the last three times that Henry Hub prices experienced a mini-rally (early to mid-May and for a week each in early and late June), those price increases were followed by sharp weakness. It is impossible to be certain, but some analysts suggest that this increase may be different.

While two weeks hardly constitutes a trend, slight declines in production may be an early indication of the ever and oft-promised supply response to low prices we have been hearing about all summer. We are also curious to see how long it takes the recent increase in drilling activity to hit production.

Will new drilling translate into new production before last year’s rig count collapse lowers supply precipitously, or will gas prices resume their cyclical, commodity boom-bust cycle? Only time will tell.

Visit this link to download the full Natural Gas Market Indicator. Topics covered include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Tags: market indicators

Residential Natural Gas – Quantifying the Savings

September 29, 2009 by Mike Pomorski · Leave a Comment
Filed under: Natural Gas

AGA often points out that per customer residential natural gas consumption has declined significantly since 1970, an impressive accomplishment brought about by a number of factors (gas LDC efforts, efficiency standards, innovative rate design, and changes in household energy consumption patterns, to name a few).

This got me thinking about what residential natural gas consumption would have been if not for those efficiency gains. The year 1987 is the first year that the Energy Information Administration (EIA) reports both total residential customers and residential consumption of natural gas. Using EIA’s data, if you take the average natural gas use per customer from 1987-1989 and multiply that by the number of residential customers in each year from 1987-2007, the result is what consumption would have been in each year, all else being equal, had the residential sector not gotten more efficient. Subtract what was actually consumed in those years and you get consumption savings. Add up the individual years and you get a 20 year total.

Using that method, the United States avoided 11.7 trillion cubic feet (Tcf) of residential natural gas consumption from 1987-2007. Put another way, if natural gas consumption per residential customer had remained at its late 1980s level through 2007, the residential sector would have consumed 11.7 Tcf more gas during those 20 years than it actually consumed.

To be fair, there is certainly a difference between avoided consumption in the residential sector and avoided consumption overall. Some of the gas not consumed by individual homes was likely consumed by the commercial, industrial or electric power sectors in those 20 years. Furthermore, higher residential consumption would have probably increased prices, which would tend to limit consumption increases. Still, with those caveats, 11.7 Tcf seems like a reasonable enough rough estimate of avoided residential natural gas consumption in the 20 years from 1987-2007.

What’s the big deal about 11.7 Tcf?

In the context of consumption, 11.7 Tcf could provide for 100% of the 2008 residential natural gas consumption (4.87 Tcf) for almost two and a half years, or provide for 100% of 2008 natural gas consumption for power plants (6.66 Tcf) for almost two full years.
In the context of production, 11.7 Tcf is more than half a year of total U.S. dry natural gas production (20.7 Tcf)
In the context of carbon, 11.7 Tcf of avoided natural gas consumption is equal to 640 million metric tons of avoided CO2 emissions using EIA’s conversion factor. As it happens, 640 million metric tons is more than Canada’s total 2006 emissions from energy (the latest year available from EIA). If you priced that carbon at $20 per metric ton it would be worth almost $13 billion.

Since these efficiency savings occurred in the past they do not get the credit or attention they deserve. But when you think about what the natural gas distribution industry should do regarding energy efficiency, keep in mind what it has already done.

Tags:

NPR’s natural gas series

September 24, 2009 by Chris Hogan · 2 Comments
Filed under: Natural Gas

NPR today wrapped up a three-part series on the story of natural gas. I want to applaud NPR for taking the time to focus the attention of its readers and listeners on the importance of natural gas in the green energy discussion. Natural gas is an abundant, reliable and domestic source of energy that is also the lowest carbon fossil fuel.

While I agree with many of the people who commented on the stories who call for a balanced discussion about all aspects of natural gas production, the fact remains that we need to address pressing energy issues now.

The American Gas Association, which represents 202 local energy utilities across the country, actively supports the use of alternative fuel sources for electric generation. Natural gas is already the cleanest fossil fuel—it contains just one carbon atom—and combined with new, highly efficient natural gas technologies, natural gas used directly in America’s homes and businesses is the most immediate and way to begin to meet the demands of low-carbon future.

This important discussion needs to continue, but even the most optimistic projections show that renewables will not be able to provide significant power generation for at least several decades. As America’s energy demands continue to grow at a breakneck pace the choice that faces us right here and right now remains the same. Any sensible energy plan must include natural gas, which already meets one-fourth of America’s energy needs and is the fastest growing of the fossil fuels.

Tags: npr