Category Archives: Natural Gas

Chris McGill Natural Gas Market Indicators: November 14, 2016

Relatively low acquisition prices, an extraordinarily warm summer and retiring coal-fired power generation combined to push natural gas volumes for power generation in the lower-48 to new highs in 2016. Natural gas spot prices failed to close above $3.00 per MMBtu at any time during the summer, in turn creating a market dynamic ripe for coal-to-gas re-dispatch on the electric grid. But that wasn’t the only coal-to-gas dynamic; the 22 gigawatts of coal-fired power plant capacity retired during the past two years also created new demand for natural gas. And this past summer turned out to be the hottest of any in 50 years.

The combined effects of these factors meant that from April through October gas draws for power generation averaged 30 Bcf per day, which is 6 percent higher than last year and 18 percent higher than the five-year average. Remarkable demand indeed. Now as we approach winter, heating loads in small volume markets will predominantly shape the market—that is, if it ever gets cold across a significant portion of the country. Storage inventories are elevated and in record territory. Production is strong and stable. Even rig counts are starting to rise once again. In all, North American natural gas supplies are robust while, for the most part, temperatures are mild—a recipe for modest forward pricing.

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: October 28, 2016

Gas-directed drilling bumped up during the past several weeks with price increases of $3 per MMBtu and more. But now in late October, natural gas pricing at Henry Hub is below $3 again, and the market will look for reasons to sustain the earlier momentum. Storage inventories are strong, so the one ingredient missing to frame the coming winter is heating degree days.

Will the winter for the majority of the country mean fewer (warmer than normal) or more than average heating degree days (colder than normal)? If it is cold, will it be sustained over large regions or hit and miss? Local natural gas utilities always plan for the possibility of reaching a peak design day and thus serving firm customers and others without interruption. Now Mother Nature will determine the targets to be managed with all of the resources currently in place to assure reliable, affordable service.

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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Jake Rubin Renewables and Natural Gas Rise Together

The International Energy Agency said today that renewables surpassed coal last year to become the largest source of installed power capacity in the world. While solar, wind, geothermal and other non-hydro renewables remain a very small portion of the world’s total primary energy supply, they are on the rise. This has taken place simultaneously with growth in the use of natural gas for both electric generation and in homes and businesses for heating and cooling, water heating, cooking and clothes drying. More homes and businesses use natural gas today than ever before and the numbers continue to increase.

Substantial amounts of coal-to-gas switching has taken place alongside the growth in renewable electricity in the United States.  Between 2007 and 2015, the amount of electricity generated at coal-fired power plants declined more than 30 percent. Natural gas and renewables have filled that gap, with natural gas providing about two-thirds of the electricity to plug the hole left by coal; renewables made up the other third. Natural gas continues to grow rapidly and will remain a foundational fuel for the world’s energy supply for some time to come.

This is what an “all of the above” energy plan looks like and it has brought us to the lowest annual carbon dioxide emissions in decades.

 

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Richard Meyer Natural Gas Market Indicators: September 29, 2016

Many variables are in play as we approach what is normally a one-month shoulder period in the natural gas market. Lower volumes of natural gas to power generation, cumulative production adjustments balanced by supplies from Canada, strong pipeline exports to Mexico, and maintenance at LNG facilities coincide with Henry Hub prices at about $3 per MMBtu. Heating degree day data will say much about where that market goes during the winter heating season. The cost of gas injected into storage likely has been a great value for companies given low summer commodity prices this summer. This value may ultimately transfer to customers as winter bills are tested compared to last year, during which time winter temperatures were largely a non-event with warmer-than-normal conditions for most of the country. Now we have one month to build expectations for November 2016 through March 2017.

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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