Friday, May 23, 2014

Natural Gas: EIA Weekly Supply/Demand Report

Back in February the American Chemistry Council put out a press release with the headline "U.S. Chemical Investment Linked to Shale Gas Reaches $100 Billion".

That's a lot of investment and a lot of demand for natural gas. Combined with the 2012-13 powerplant fuel switching and the coming (slowly) demand from the transport sector the industry is setting up to go into supply/demand deficit over the next couple years as decline curves and low levels of drilling shrink the cornucopia a bit. We have been favoring the equities over the futures and longer dated over shorter.
$4.382 last up 2.3 cents.

From the Energy Information Administration:
Natural Gas Weekly Update 
In the News:
Industrial natural gas consumption growth continues rising Providing another sign of continued growth in industrial demand for natural gas, two European companies announced earlier this month that they would form a joint venture to build an ammonia plant on the Gulf Coast. BASF, a German chemicals company, and Yara, a Norwegian agricultural company, plan to build the plant on an existing BASF site in Freeport, Texas. The plant would have a capacity to produce 750,000 metric tons of ammonia per year and could use up to 77 million cubic feet per day (MMcf/d) of natural gas as a feedstock. BASF and Yara announced in October that they were planning an ammonia plant, and cited relatively low natural gas prices over the past several years as a reason for locating the plant in the United States.

After industrial natural gas consumption bottomed out in 2009 at 16.9 Bcf/d, it has been increasing at a moderate pace. The May 2014 Short-Term Energy Outlook projects that industrial consumption will increase through 2015 and the Annual Energy Outlook projects continued growth through 2040. Over the past few years, economic recovery, relatively low natural gas prices, and growth in domestic natural gas supply have created an environment conducive to natural gas-intensive manufacturing processes, including chemicals and fertilizer production. Ammonia (including ammonia-based fertilizer) and methanol plants use natural gas directly as a feedstock and are thus among the most natural gas-intensive industrial end users. Although natural gas prices have risen over the past several months, they are still relatively low compared to prices before 2009 in the United States and to current prices in Europe and Asia. As a result, several new ammonia-based fertilizer and methanol plants have come online in the past year, and more are scheduled to open in the coming years.

In February 2013, Potash Corp. restarted its ammonia plant in Geismar, Louisiana. The plant had been idle since 2003. Bentek Energy estimates the facility uses 184 million cubic feet per day (MMcf/d) of natural gas. In addition to several expansions and upgrades to existing ammonia plants, Bentek reports two other new ammonia-producing plants in the United States that will use more than 100 MMcf/d of natural gas. Iowa Fertilizer Company's plant in Wever, Iowa, and the Donaldsonville Nitrogen Complex, in Donaldsonville, Louisiana, are planned to begin operating at the end of 2015....MUCH MORE 
U.S. Natural Gas Supply - Gas Week: (5/14/14 - 5/21/14)

Percent change for week compared with:
last year
last week
Gross Production
Dry Production
Canadian Imports
      West (Net)
      MidWest (Net)
      Northeast (Net)
LNG Imports
Total Supply
U.S. Consumption - Gas Week: (5/14/14 - 5/21/14)

Percent change for week compared with:
last year
last week
U.S. Consumption
Total Demand