Friday, August 28, 2015

Natural Gas: EIA Supply/Demand Report

From the Energy Information Administration:

In the News:

Northeast production sets record high on Monday
Production in the Northeast reached a record high of 20.4 billion cubic feet (Bcf) on Monday, August 24, according to Bentek Energy data. In the last several years, growth in total U.S. natural gas production has been driven largely by production gains in theMarcellus and Utica shale plays. Marcellus, which spans Ohio, Pennsylvania, and West Virginia, is the most productive U.S. shale play, and alone accounted for 21% of total U.S. dry natural gas production in the first five months of 2015. During that period, total U.S. dry gas production grew 8% over 2014 levels for the same period, with increases in Marcellus production contributing more than half of that growth. The record high Northeast production on Monday may be attributed to the completion of maintenance in the area. 
The relatively large volumes of natural gas produced in the Northeast combined with constrained pipeline takeaway capacity have contributed to natural gas prices in that area that are below prices in other regions of the country. The price discount for prices at Transco’s Leidy line in Marcellus to the U.S. benchmark Henry Hub has averaged $1.48 per million British thermal units (MMBtu) since the start of the year. This price difference has contributed to the announcements from some producers that they will be slowing their drilling activity in the Marcellus and Utica until new pipeline takeaway capacity enters service....MORE
Prices/Demand/Supply:Prices vary slightly, but flat in many market locations. At the start of the report week, temperatures were generally above average in the East, South, and West, though below average in the Midwest and Rockies. Temperatures remained moderate in the central states and dropped some in most other regions, with the exception of the Northeast, which remained above average. The Henry Hub spot price began the report week at $2.73/MMBtu last Wednesday and settled yesterday down slightly at $2.72/MMBtu. Prices at other market locations also declined slightly. Spot prices at the Chicago Citygate decreased by 4¢ Wednesday-to-Wednesday, closing yesterday at $2.81/MMBtu. Prices at PG&E Citygate, serving Northern California, declined from $3.18/MMBtu last Wednesday to $3.12/MMBtu yesterday. Of note, the trading point Sumas, which is the primary border crossing for natural gas from Canada to Washington state, serving the Pacific Northwest, saw a rise from $2.07/MMBtu last Wednesday to $2.53/MMBtu yesterday because of supply constraints on the Canadian side. 
Northeast prices respond to increased power burn. In the Northeast, prices fluctuated during the report week in response to varying temperatures, with New York and New England seeing above average temperatures for part of the week. New England spot prices also responded to an increased demand for natural gas because of an outage at the Pilgrim-1 nuclear power station, near Plymouth, Massachusetts, which started on Saturday, August 22, and ended yesterday. Gas prices at the Algonquin Citygate, which serves Boston, started the report week at $2.62/MMBtu, decreased to $2.35/MMBtu for the weekend, then rose on Tuesday, because of above-average temperatures and increased power sector demand, to $3.29/MMBtu, and settled at $3.06/MMBtu yesterday. Similarly, at the Tennessee Zone 6 200L serving lower New England, prices fluctuated during the report week, starting last Wednesday at $2.53/MMBtu, increasing to $3.22/MMBtu on Tuesday, and settling yesterday at $3.02/MMBtu. At Transcontinental Pipeline's Zone 6, serving New York City, the spot price started the report week at $2.73/MMBtu and ended the report week yesterday at $2.66/MMBtu....