Author Archives: Richard Meyer

Richard Meyer Natural Gas Market Indicators: Oct. 15, 2014

The supply build for the United States is strong. Increased dry gas production coupled with relatively cooler weather this summer have bolstered natural gas storage injections and strengthened underground stocks that were at decadal lows following last winter’s polar vortex.

Since the end of March, injections of natural gas into underground storage have been at a record pace and well above the five-year average. Even with the rapid rate of injections, the deep starting point that stocks began the injection season still means storage volumes are about 10 percent below last year. Despite this, production is strong too. October dry gas volumes are 5.3 Bcf per day higher than last year, an incredible eight percent gain.

With production and storage factors considered, the strong supply outlook is reflected on a relatively narrow NYMEX natural gas pricing band between $3.85 and $4.00 for the upcoming winter heating season.

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

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Natural Gas Market Indicators: Sept. 26, 2014

The forward market for natural gas futures currently points to a price expectation range of only about 20 cents for the five-month period November 2014 through March 2015, which is essentially huddled around $4 per MMBtu. Conditions can change, but once again market stability seems to be the observed pattern for the coming winter heating season.

With the weather induced demand totals seen during the 2013-2014 winter and the possibility of a more normal winter this year, analysts will begin to scrutinize what portion of that seasonal demand noted last winter has become institutionalized. For example, what portion of power generation demand is here to stay? Are the conservation and efficiency patterns seen during the past decade in the residential and commercial sector staying intact? Is industrial demand growing with the completion of key projects many of which are founded on a stable natural gas market?

Comparisons of winter season performance year after year are part of the crucible that allows analysts to understand the ebb and flow of the natural gas supply/demand balance in this country.

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

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer 7 lessons from last winter

Report Cover Art 214x300 7 lessons from last winterIt was the strongest winter in decades. The polar vortex, a new term to most of us last winter, brought a mass of freezing air from its usual home in the artic and dropped it over North America where it settled and stayed. As the bitter cold persisted, families turned up thermostats and power consumption jumped. Across the country, more natural gas was being used than ever before.

In fact, the top five days for natural gas consumption in history took place last winter. For the industry, it was the most exceptional heating season ever. But it was more than just records and high demand for natural gas. It was a test, the industry’s first during the shale era.

In recent years, abundant supplies have awakened broader recognition of new and greater use for natural gas and an expectation of performance. It’s in this context that the industry faced consumers’ unprecedented requirements this winter. How did the industry do?

Simply put, local gas companies rose to the occasion and customers were served. When presented with a real-world test of stability, capability, and reliability under exceptional conditions, gas utilities delivered. This outcome was the result of the planning, preparation and performance of the industry, and of gas utilities in particular.

This week, AGA released a new report entitled Promise Delivered, providing an examination of the past winter heating season from the perspective of natural gas utilities.

Here are the top seven observations and conclusions to take away from the 2013-2014 polar vortex:

  1. The 2013-2014 winter set new records for the largest volume of natural gas ever consumed.
  2. Natural gas utilities employ numerous flexible approaches to supply planning and operations. Across the country, resources were available when needed, which suggests that existing processes, regulatory oversight and planning procedures are working.
  3. Underground storage played its largest role ever to meet consumer demand, a result of investment and contracting to assure supply storage when needed.
  4.  Constraints on systems that feed into distribution company networks can affect gas utility operations and customers. These considerations are often recognized in system and regional infrastructure planning as appropriate.
  5.  Flowing natural gas was available and generally affordable for local gas utilities that needed it. Supplies were bolstered by strong and steadily increasing domestic production, incremental pipeline volumes from Canada, and short-term bursts of liquefied natural gas imports.
  6.  Customers that contract for interruptible service are a crucial component of gas utility supply planning and system operations management during peak days. Due to the exceptional winter, the frequency and duration of interruptions increased in some cases.
  7.  Stable and affordable natural gas prices and the cumulative contributions of energy efficiency helped to moderate customer bills this winter. Continued encouragement of policies to maintain affordable prices and spur greater efficiency will help further mitigate bills during future winter events.

Report Infographic 7 lessons from last winterIn many ways, these tangible experiences of this past winter pave the way for future development of natural gas applications in homes and businesses. The study’s observations reinforce a vision of a stable US natural gas market shaped by the following broader developments:

  • Growth across the natural gas industry – production, transmission, storage and distribution – has laid the foundation for today’s market. Future infrastructure development will be key to further growth and stability.
  • Demand signals have facilitated the substantial increase in domestic natural gas supplies. Future increases in demand are expected to continue this trend.
  • Policies and regulatory precepts evolve with time, and the natural gas industry will face new challenges in the future. However, the iterative process of aligning industry opportunity with regulatory principles has been most successful when it manifests sustainable value for utilities and consumers.
  • The future of the natural gas industry is one of efficiency at its core—in production, transportation, and direct-use.

Bottom line: a new bar has been set. Our vision of a stable natural gas market is predicated on today’s realities of abundant domestic supplies, diverse sources, flexible options and affordable prices, and this past winter’s experience substantiates that vision. Ultimately, it underscores the industry’s ability to deliver and serves as a proof point for new investments in the nation’s natural gas infrastructure.

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Richard Meyer Natural Gas Market Indicators: Sept. 12, 2014

Total natural gas supply in the United States (domestic production less natural gas liquids extraction and other shrink, plus net imports from Canada and very minor imports of LNG) has been running at about 74-75 Bcf per day in September with total demand (consumption) in the high 50s to low 60s, according to Bentek Energy.

That means that double digit volumes of natural gas have been available for underground storage injections – and that trend has continued for the first half of September. Sustaining that trend could push underground working gas inventories to about 3.5 Tcf to start the winter heating season. With domestic production running 4 Bcf per day higher than this time last year, that adds up to a strong supply position entering the winter.

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

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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