Natural Gas Supply

Iran sees gas deal with Total within weeks: minister

Iran expects to sign a long-delayed gas deal with French oil major Total ( TOTF.PA ) in the next few weeks, Iranian Oil Minister Bijan Zanganeh was quoted as saying on Saturday. “Iran and Total are summing up the discussions on signing the contract for the development of phase 11 of South Pars, and this is almost in the final stages,” said Zanganeh, quoted by the oil ministry’s news website SHANA. “The contract … will be signed before the end of the (current) government,” Zanganeh said. Re-elected in May, President Hassan Rouhani is expected to form his new cabinet in August. Total’s chief executive Patrick Pouyanne said in late May that the company planned to conclude the South Pars gas deal before […]

Are Russia And The Saudis Planning A Natural Gas Cartel?

The fledgling production cut strategy of OPEC (Saudi Arabia) and non-OPEC (Russia and the FSU) shows that a new strategy is needed to counter the ongoing doubts in the markets. At the same time, Russia and Saudi continue to give indications of a possible OPEC 2.0 scenario, in which a possible Russian membership is on the table. This would confront the market with a renewed and stronger oil cartel, although the overall strategies need to be adjusted. At the same time, Saudi Arabia, via its oil giant Aramco has openly stated to be interested in global gas investment opportunities, starting in Russia’s Siberian region. While the media still looks at the current discussions as a pure crude oil cooperation strategy, some see another development on the horizon. The real power of OPEC, non-OPEC cooperation would increase if they would not only include a crude oil production cut, but also […]

Can U.S. LNG Challenge Gazprom In Europe?

13 Jun 2017   LNG

The first cargo of U.S. liquefied natural gas last week reached its destination in Poland. The country’s Prime Minister called this “a historical moment,” that brought the Central European country a step closer to breaking its energy dependence on Russian gas. At the same time, the Netherlands also received its first LNG delivery from Cheniere Energy, the only U.S. exporter so far. The U.S. gas industry has been quick to take advantage of growing LNG demand and abundant shale gas output to join the global LNG trade. Europe is a natural focus, not just because of stable demand, but because of the European Union’s energetic drive to diversify its sources of energy away from Russia. Gazprom holds a third of the EU gas market, which the EU sees as a dominant position. This is especially true for Poland, which has historical reasons to want to be as independent as […]

Bearish News For Natural Gas As Inventories Continue To Rise

Natural gas storage inventories increased by 106 Bcf for the week ended June 2, per EIA. The report is bearish with the build coming above market expectations, which were calling for a 98-Bcf increase in stocks. The full range of forecasts was between 80 Bcf and 111 Bcf. The Henry Hub prompt contract (July 2017) traded as low as $2.93 on Monday, but it went back above $3.00 on Tuesday and Wednesday with warmer temperatures in the forecast. However, the larger-than-expected build pushed gas prices below the $3.00 mark again, but only temporarily. The July 2017 gas price is up 1-2 cents following the EIA report and currently trading at $3.04 per MMBtu. Working gas storage inventories increased to 2.631 Tcf, level 332 Bcf below last year but 237 above the 5-year average. See Drillinginfo EIA’s chart below. This graphic shows projections for end-of-season inventories as of Nov 1. […]

Long Promised, the Global Market for Natural Gas Has Finally Arrived

7 Jun 2017   LNG

One day in March, the Rioja Knutsen tanker, filled with liquefied natural gas, was traveling from the U.S. to Portugal. Suddenly, Mexico’s power company lobbed in a higher bid for its cargo. At the Bahamas, the ship abruptly made a starboard turn and headed south. How natural gas is bought and sold in the world’s scattered regional markets for the fuel is changing rapidly. Ships such as the Rioja Knutsen are stitching those regions…

Higher US natural gas prices positive for production gains in ’17, ’18: EIA

7 Jun 2017   Prices, Shale Gas

While projections for higher natural gas prices are expected to reduce gas’ share in the generation mix, the subsequent increase in cash flow to gas producers is seen boosting gas production, reversing last year’s drop in output, the first annual decline the industry had seen in 11 years, the US Energy Information Administration said Tuesday in its monthly outlook. The agency, in its June Short-Term Energy Outlook, put second-quarter Henry Hub natural gas spot prices at $3.14/MMBtu, down 2 cents from its May estimate. The Q3 forecast dipped 1 cent from the prior month to $3.20/MMBtu. The agency put gas prices for full-year 2017 at an average $3.16/MMBtu, a 1-cent drop from the prior month’s estimate, and forecast 2018 prices to average $3.41/MMBtu, lowering its estimate from May by 2 cents. By comparison, prices averaged $2.51/MMBtu in 2016. “The amount of US electricity supplies from natural-gas fired generation is […]

America’s Unstoppable LNG Boom

7 Jun 2017   LNG, USA

Since Cheniere sent America’s first LNG cargo abroad in early 2016, U.S. gas exports have reached buyers in Latin America, Europe, Asia, and even the Middle East. The shale gas boom allowed the U.S. to send cargoes overseas, easing some of the domestic glut, with exports hitting a new monthly record in May. Last month, 18 cargoes departed from Sabine Pass—so far the only LNG export facility in the U.S.—totaling approximately 61 Bcf, a new monthly record, the EIA said in its Natural Gas Weekly Update for the week ending May 31. America’s LNG has reached the world fastest-growing LNG import market, Asia, and markets in the Middle East. In a few days, cargoes from Sabine Pass will call at Rotterdam for a first Northwest Europe destination, and to Poland—a first delivery to a country in Central and Eastern Europe, where Russia’s Gazprom reigns supreme. Since February 2016, U.S. […]

LNG traders evaluate impact of Saudi-led diplomatic blockade of Qatar

5 Jun 2017   LNG, Qatar

LNG traders are bracing for potential trade disruptions following moves from Saudi Arabia, Bahrain, Egypt and the UAE to cut diplomatic ties with Qatar, the world’s largest LNG supplier. Saudi Arabia’s decision Monday to break diplomatic ties, consular relations as well as land, air and sea contacts with Qatar over terrorism and extremism funding claims were followed by similar moves from Bahrain, the UAE and Egypt, according to media reports. Qatar is the world’s largest LNG supplier, having exported 78.8 million mt of LNG in 2016, more than 30% of a total global supply of 257.8 million mt, according to S&P Global Platts Analytics, and an increasing share of its production is being delivered to emerging Middle Eastern buyers, including Egypt, Jordan and the UAE. Any disruptions in Qatari LNG supply could have a significant impact on pricing, regional trade flows and energy security in Egypt, which imports most […]

5 Arab States Break Ties With Qatar, Complicating U.S. Coalition-Building

5 Jun 2017   LNG, Qatar

Hours after five Arab countries broke diplomatic relations with Qatar , a crucial United States ally, Secretary of State Rex W. Tillerson offered on Monday to broker the impasse in hopes of preserving the Trump administration’s efforts to create broad coalitions against Iran and terrorist groups in the Middle East. “We certainly would encourage the parties to sit down together and address these differences,” Mr. Tillerson said. “If there’s any role that we can play in terms of helping them address those, we think it is important that the G.C.C. remain unified,” he said, adding a reference to the Gulf Cooperation Council, a group of Persian Gulf countries. The remarks by Mr. Tillerson, who is in Australia with Defense Secretary Jim Mattis, came on the heels of dramatic announcements by Bahrain , Egypt , Saudi Arabia , the United Arab Emirates and Yemen that they were […]

Why U.S. Natural Gas Demand Is Closer to Tipping the Market

Just a decade or so ago, energy traders believed that using natural gas to generate electricity instead of coal was akin to bringing Dom Pérignon to a party where Budweiser would do. Natural gas had certain environmental and compliance benefits, of course, and it was the best option for “peaker plants” that could be switched on to meet surges in demand on hot summer afternoons. But gas’s cost per unit of energy was significantly…

Natural gas has displaced coal in the Northeast’s generation mix over the past 10 years

12 May 2017   Climate, Coal, Shale Gas

Source: U.S. Energy Information Administration, Power Plant Operations Report The generation fuel mix of electricity in the Northeast Census division of the United States has shifted dramatically over the past 10 years. In the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period. Nuclear-powered generation as a share of total generation remained relatively constant near 34%. Despite more than doubling over the same period, the share of nonhydro renewables remains relatively small. Overall, total generation in the region declined by 3% between 2006 and 2016. Increased access to low-cost natural gas from the Marcellus Shale and other regional shale plays has driven the switch away from coal in the Northeast United States. Environmental policies at the federal and regional level, such as […]

More Rigs Don’t Mean More U.S. Gas

Gas rigs have doubled since August; output falls 1.2% Average Marcellus well produces 51% of what it did a year ago U.S. natural gas producers are running hard to stand still. The number of rigs drilling for gas has almost doubled since August, but output continues to fall. Even accounting for a lag between the start of drilling and first production, the drop in output is striking — a well in the Marcellus Shale, America’s most prolific reservoir of the fuel, is producing about half of what it yielded a year ago, according to Bloomberg Intelligence. Companies are struggling to overcome steep decline rates — the natural decrease in production — from shale formations that were the source of huge added supplies in years past. The slowdown could signal an end to a glut that’s sent prices down 12 percent since the beginning of the year, making gas one […]

Range Recalls ‘Incredibly Creative Solution’ for Marcellus/Utica ‘Problem’

27 Apr 2017   Shale Gas

‘Dragon-class’ and VLEC vessels facilitate transoceanic trade of surplus US ethane. On March 9, 1776, the Scottish economist Adam Smith published his influential book The Wealth of Nations , which has left an indelible mark on international trade ever since. Interestingly, exactly 240 years later a pioneering liquefied natural gas (LNG) carrier departed a Philadelphia-area terminal bound for Europe and opened a new chapter in the global gas business. Laden with more than 27,000 cubic meters of ethane, the Ineos Intrepid – a new class of LNG vessel – embarked on a nearly 4,000-mile voyage across the Atlantic Ocean to Ineos’ ethane cracker in Rafnes, Norway. As Ineos noted at the time , never before had shale gas produced in the United States been shipped to Europe. Previously ethane had only been transported in small vessels on short routes, according to ship designer Evergas . The Ineos Intrepid is […]

Ohio and Pennsylvania increased natural gas production more than other states in 2016

26 Apr 2017   Shale Gas

After reaching a record high of 79 billion cubic feet per day (Bcf/d) in 2015, U.S. marketed natural gas production fell to 77 Bcf/d in 2016, the first annual decline since 2005. Texas, the state with the most natural gas production, fell by 2.5 Bcf/d, while Ohio and Pennsylvania each increased by about 1.2 Bcf/d. EIA measures natural gas production in three different ways. Gross withdrawals are the full volume of compounds extracted at the wellhead, which includes all natural gas plant liquids and nonhydrocarbon gases after oil, lease condensate, and water have been removed. Marketed natural gas production excludes natural gas used for repressuring the well, vented and flared gas, and any nonhydrocarbon gases. Dry natural gas production is marketed production minus natural gas plant liquids. Source: U.S. Energy Information Administration, Natural Gas Monthly Note: Natural gas production in 2016 […]

Massive Natural Gas Deposit Discovered In The Gulf Coast Basin

22 Apr 2017   Shale Gas, USA

Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country. The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release. (Click to enlarge) Most of the newly recoverable gas is in the Haynesville formation, which contains around 195.8 trillion cubic feet. It also holds 900 million barrels of natural gas liquids and some 1.1 billion barrels of oil. The rest is in the Bossier formation. The USGS has been reassessing a lot of oil and gas deposits […]

EIA expects natural gas to be largest source of U.S. electricity generation this summer

Short-Term Energy Outlook (STEO) expects that electricity generation fueled by natural gas this summer (June, July, and August) will be lower than last summer, but it will continue to exceed that of any other fuel, including coal-fired generation, for the third summer in a row. The projected share of total U.S. generation for natural gas is expected to average 34%, which is down from 37% last summer but still exceeds coal’s generation share of 32%. Based on data from the National Oceanic and Atmospheric Administration (NOAA), EIA estimates that average U.S. population-weighted cooling degree days in the summer of 2016 reached the highest level on record. NOAA projections for this summer indicate cooling degree days will be 11% lower than last year. These milder expected temperatures lead to forecast U.S. summer electricity generation of 1.16 billion […]

New U.S. pipelines to drive natural gas boom as exports surge

13 Apr 2017   Pipelines, Shale Gas

U.S. energy firms are scrambling to finish a slew of pipelines that will unleash rich reserves of shale gas in Pennsylvania, West Virginia and Ohio as the nation prepares to become one of the world’s top natural gas exporters. The pipelines are expected to boost output from shale fields in the three states by giving producers access to new domestic and international markets. Those states could supply about a third of all U.S. natural gas once the pipeline expansion is complete, up from about 25 percent now, according to projections from the U.S. Energy Information Administration (EIA). The network will bring cheaper fuel supplies for power generation and industry being built in the eastern half of Canada and the United States, especially along the U.S. Gulf Coast. It would also transport the huge volumes needed to feed facilities that chill the gas to liquid so it can be shipped […]

Three US-based LNG terminal projects report delays to operational start dates

8 Apr 2017   LNG

Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy’s website. LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports. April updates published on the department’s website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG’s Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom’s Crystal River, Florida, facility, with export capacity of 80 MMcf/d. Lake Charles now anticipates that the first of its three trains will be operational in 2022. Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April […]

Is Natural Gas In The Midst Of A Boom-Bust Cycle?

5 Apr 2017   LNG, Shale Gas

After six decades of relying on outside sources, the United States is poised to become a consistent net exporter of natural gas . The shale boom and the rush to embrace LNG has fueled the shift, one that will have significant consequences for natural gas prices around the world. In 2016, total U.S. natural gas imports reached 3 trillion cubic feet, the bulk of which came via pipeline from Canada. Month to month, natural gas imports hovered around 250 billion cf, according to data from the EIA . Exports, however, have been shooting up from less than 60 million cf in 2006 to 269 million in January 2017. The ratio of imports to exports has been falling for years, and 2017 will be the year that exports officially exceed imports for the first time since 1957. That date is significant, as it was the year the United States imposed […]

Gas Giants Share OPEC’s Shale Pain as U.S. Supply Flows East

4 Apr 2017   Shale Gas

OPEC isn’t the only decades-old energy hegemony being turned on its head by U.S. shale. Liquefied natural gas sellers from Qatar to Malaysia that dominated gas sales to Asia for years are facing the prospect of rising American exports. While less than 30 U.S. cargoes have landed in Asia, their effect was felt even before they arrived. LNG trade in 2016 jumped the most in five years, contract lengths were sliced in half in the past decade, and spot prices slumped more than 60 percent in the past three years. That means the global LNG titans gathering in Tokyo this week for Gastech are in the midst of the biggest shakeup since the industry was founded in the 1960s. Just as American crude is increasingly making its way to Asia, the world’s biggest oil market, the burgeoning armada of gas cargoes from the U.S. and elsewhere are poking holes […]

U.S. lower 48 natgas output down for second straight month: EIA

1 Apr 2017   Shale Gas, USA

U.S. natural gas output in the lower 48 states declined for a second month in a row to 78.3 billion cubic feet per day (bcfd) in January, the U.S. Energy Information Administration (EIA) said on Friday in its monthly 914 production report. That compared with 78.7 bcfd in December. Production peaked at 82.6 bcfd in February 2016. Output declined in two of the three biggest producing states in the lower 48, Texas and Oklahoma, but held at a record high in Pennsylvania. In Texas, the country’s largest gas-producing state, output declined for a ninth month in a row, down 0.2 percent to 20.6 bcfd in January from December. That was the state’s lowest level of monthly output since February 2011. Production in Oklahoma declined for a fifth month in a row, down 0.8 percent to 6.4 bcfd in January, its lowest monthly output since June 2014. In Pennsylvania, output […]

Putin Exploits Europe’s Divisions in Bid to Dominate Gas Supply

This small port town offers a textbook case of how Russian President Vladimir Putin has thwarted U.S. and European efforts to rein in Moscow’s most powerful source of leverage and cash: energy. Karlshamn’s local leaders in January opened its port to Russia’s state-owned energy company, PAO Gazprom, in defiance of Swedish national authorities alarmed by a growing Russian military presence in the Baltic Sea. A subcontractor for a Gazprom subsidiary is now allowed to store pipes here for an $11 billion…

Natural Gas Prices Pare Losses After Data

Natural-gas prices fell Thursday as investors began to contemplate how much natural gas will be added to storage as spring begins. Futures for May delivery settled down 4 cents, or 1.24%, at $3.191 a million British thermal units on the New York Mercantile Exchange, snapping a two-session winning street. The U.S. Energy Information Administration reported that natural-gas supplies fell by 43 billion cubic feet last week. That…

Is Haynesville About To Make A Comeback?

31 Mar 2017   Shale Gas

Back in early 2011, the Haynesville shale play in east Texas, northwest Louisiana, and southwest Arkansas surpassed the Barnett Shale in Texas as the highest-producing shale gas play in the U.S., according to reported pipeline flows. Since 2013, however, Haynesville production has been falling amid low gas prices, and the shale play has been outrun by the lower-cost Marcellus and Utica basins in the Northeast. The Haynesville may have been down, but it is not yet out. Recent production forecasts and Haynesville’s geographical proximity to the Sabine Pass LNG terminal and other planned LNG export facilities, as well as its proximity to planned additional pipeline capacity to Mexico, may help Haynesville come back to life again. The uncertainty and downside, as always, are the price of natural gas and concerns that a glut would keep prices low, at least in the short to medium term. But many producers have […]

Chevron makes LNG headway

30 Mar 2017   Australia, LNG

The third production facility at the Gorgon liquefied natural gas facility off the Australian coast is now in service, the regional subsidiary of Chevron said. “This is a key milestone for the Gorgon joint venture participants, our workforce, customers, government and all those associated with the project over its lifetime should be extremely proud,” Nigel Hearne, Chevron’s regional managing director, said in a statement . “We are committed to being a safe and reliable supplier and look forward to supplying cleaner-burning natural gas for decades to come.” Bringing the third production facility, or train, online means Chevron’s flagship LNG project in Australia is in full service. The first shipments of LNG left Gorgon in March 2016. The project will eventually produce 15.6 million tons of LNG […]

After six decades, U.S. set to turn natgas exporter amid LNG boom

29 Mar 2017   LNG

The last time the United States was a net exporter of natural gas was in 1957, when Dwight Eisenhower was president. That should change in 2018 when the country is expected to become the world’s third-largest exporter of liquefied natural gas (LNG). By the end of next year, U.S. LNG export capacity in the lower 48 states will top 6 billion cubic feet per day (bcfd), or 8 percent of the country’s domestic consumption, up from zero at the beginning of 2016. Six bcfd of gas can fuel about 30 million U.S. homes, or almost every house in California, Texas and Florida combined. That growth in U.S. LNG exports is set to transform world energy markets. Just a decade ago, before the shale revolution, the United States was expected […]

Gas Glut Reverses Lucrative 2016 Trade

A flood of natural gas swamping the U.S. is turning into a global glut, sinking prices and dimming the hopes of American producers to export their way out of an oversupplied domestic market. Natural-gas futures have fallen 25% over the past 2½ months. The declines continued Tuesday, with April futures dropping 3.45% to $2.938 a million British thermal units on the New York Mercantile Exchange. Shares of gas-production companies are…

Natural Gas Prices Could Plunge Below $2

So far this year, natural gas has performed the worst among major commodities, posting painful losses in January and February. It has rebounded somewhat in the last few weeks, but hovering around $3 per MMBtu, gas prices are still sharply lower compared to the fourth quarter. Changes in seasonal temperatures are a pivotal factor for natural gas markets, and warmer winters mean weaker demand. Natural gas consumption spikes during winter months as millions of people crank up the heat, while consumption patterns descend into valleys in the spring and fall, with a smaller peak in the summer. A bout of warm weather during winter can upend gas demand forecasts. And that is exactly what happened this year. According to NOAA, the U.S. just posted its second warmest February on record, dating back to when data collection began in the 19th century. Average temperatures were 7.3 degrees higher than average. […]

Drilling Boom in Hottest US Oil Play Is Bad News for Gas Bulls

A drilling surge in America’s hottest oil play may prove to be a pitfall for natural gas bulls. As explorers extract crude from the Permian shale in West Texas, they’re also producing gas. A jump in the number of rigs operating in the basin is adding to the so-called fracklog, or the number of drilled wells that are waiting to be connected. That’s a sign that gas output from the region will jump by about 25 percent over the next year, threatening to send prices below $2 per million British thermal units, according to Tudor Pickering Holt & Co. Gas is already this year’s worst performer among major commodities, and the prospect of a torrent of supply from the Permian means 2018 may not be much brighter for gas bulls. Output from the basin would augment production from the Marcellus shale in Pennsylvania and West Virginia, which […]

Warm weather leads to first recorded natural gas storage injection in February

Warmer than normal weather throughout much of the United States resulted in the first recorded net natural gas injection during a week in February since weekly storage data has been collected. For the week ending February 24, the amount of natural gas in storage in the Lower 48 states increased 7 billion cubic feet (Bcf). While some weeks during March in previous years had recorded injections, net injections of natural gas into storage do not typically occur until at least April. Weekly changes in natural gas storage reflect changes in natural gas consumption, production, and, to a lesser extent, trade. Natural gas consumption is particularly sensitive to fluctuations in weather. Not only is natural gas consumed directly by furnaces and boilers in homes and businesses for heating, but natural gas […]

Oil Major BP Buys Boone Pickens’ Clean Energy Assets

BP is investing $155 million in production facilities for Clean Energy Fuels Corp.’s Redeem-branded renewable natural gas. The deal supports both companies’ role in the future of RNG, or biomethane, for fleets and transport companies to hit emissions regulation targets and to help fulfill growing fuel demand in the natural gas vehicle market. BP is paying for Clean Energy’s existing biomethane production facilities, its share of two new facilities, and its existing third party supply contracts for RNG. The oil company will continue to subcontract the operations of these facilities to Clean Energy. Clean Energy will buy RNG from BP and collect royalties on gas purchased from BP and sold as Redeem fuel at it stations. Clean Energy will have access through a long-term supply contract with BP. Clean Energy will be able to expand its Redeem customer base at its North American network of natural gas fueling stations. […]

US natgas output seen up in 2017, but still below 2015 record: EIA

The U.S. Energy Information Administration (EIA) on Tuesday projected dry natural gas production would rise in 2017 after falling in 2016, while gas consumption would decline in 2017 after rising to a record high last year. EIA projected production would rise to 73.69 billion cubic feet per day (bcfd) in 2017 from 72.31 bcfd in 2016, according to its Short Term Energy Outlook (STEO) in March. That 2017 output projection is the same as EIA made in its February STEO report and falls short of the record high 74.14 bcfd produced on average in 2015. Annual production declined in 2016 for the first time since 2005 as low energy prices reduced drilling activity . EIA also projected U.S. gas consumption would fall to 73.65 bcfd in 2017 from a record […]

Iran vs Russia: The Next Natural Gas War

Not everybody attending the Iranian natural gas summit last week in Frankfurt was there for the same reason. While most were gauging the prospects for an opening of major natural gas reserves and liquefied natural gas (LNG) export prospects, others were there for quite different reasons. Take the three representatives from Russia’s gas giant Gazprom (OGZPY), for example. They weren’t there to scout new investment packages. On the contrary… They were there to see just how badly their company’s position was under siege. And it’s no wonder the Gazprom guys looked concerned. From what I saw at the summit, they have every reason to be. For energy investors, on the other hand, the news is very good… Gazprom is in Dire Straits Gazprom may still be the largest natural gas company on the face of the Earth, exporting more gas than anybody else and providing revenues that account for […]

Gazprom Says Europe’s Appetite for Gas Keeps Getting Bigger

Europe’s appetite for natural gas is leading to a growth “renaissance” as its stores of the fuel languish at the lowest levels since 2013, according to Gazprom PJSC. Europe’s appetite for natural gas will probably meet or even exceed last year’s growth as the region needs to replenish its lowest gas storage levels since 2013, according to Gazprom PJSC. A “conservative estimate” by the world’s biggest exporter is that Europe’s demand may increase by about 5 percent this year, Deputy Chief Executive Officer Alexander Medvedev said Thursday in an interview in Hong Kong. The state-run company, which supplied record volumes to Europe last year and met more than a third of consumption, sees its 2017 shipments of “no less than in 2016,” he said. The European Union’s gas demand increased in 2015 after four years of declines. After the coldest January in seven years and plunging output at domestic […]

Natural Gas Prices Fall To 3 Month Lows On Disappointing Inventory Draw

Natural gas has fallen to a new three-month low thanks to lower-than-expected draws on storage, prompting the Wall Street Journal to report that the coming months may see bearish oversupply. The Energy Information Administration (EIA) reported yesterday that natural gas in storage in the country fell by 2.445 trillion cu ft in the week to February 10, down by 114 billion cu ft from the previous week and at the lowest for the last three months. Analysts polled by S&P Platts had a consensus forecast for a draw of 126 billion cu ft , citing the unusually warm weather across most of the country. A Reuters survey expected storage to be down by 104-137 Bcf. The draw was smaller than in the preceding week, when it stood at 152 billion cu ft, Investor.com recalls, and also smaller than the decline a year earlier, when it was 163 billion cu […]

Pipeline Approvals Could Put A Ceiling On Gas Prices

Two new pipelines to be built over the next 12-18 months are likely to bring down natural gas prices on the U.S. market just when they were starting to rise more consistently. While this is good news for consumers, it is not so welcomed news for producers, who might have to start thinking about finding new markets. The pipelines in question are Atlantic Sunrise , a project of Williams Partners, and Energy Transfer Partners’ Rover . The two got the greenlight from the Federal Energy Regulatory Commission last week and became cause for celebration for producers in the Utica and Marcellus shale plays, who have been forced by low prices and lack of governmental support to sell their gas at a solid discount to the national benchmark Henry Hub. Of course, Energy Transfer Partners and Williams Partners will also take part in the celebrations, as would power utilities as […]

Speculators cut U.S. natgas net longs for second straight week: CFTC

U.S. natural gas speculators cut their net long positions for a second week in a row on forecasts that the weather will moderate for most of the rest of the winter. Speculators in four major NYMEX and ICE markets reduced their bullish bets by 11,699 contracts to 314,396 in the week to Jan. 31, the U.S. Commodity Futures Trading Commission said on Friday. That compares with a five-year (2012-16) average speculative net long position of around 127,300 contracts. The biggest net long position was 456,475 contracts in April 2013, while the biggest net short position was 166,165 contracts in November 2015, according to Reuters data. Gas futures on the New York Mercantile Exchange averaged $3.29 per million British thermal units during the five trading days ended Jan. 31, versus $3.28 during the five trading days ended Jan. 24. The latest long-term forecasts call for warmer-than-normal temperatures through the end […]

Natural Gas Prices Rise After Storage Levels Remain Low

Natural gas prices climbed Thursday after weekly data showed natural gas storage levels remained low despite mild weather. Natural gas for February delivery gained 5 cents, or 1.5%, to settle at $3.382 a million British thermal units on the New York Mercantile Exchange. Prices pulled back from gains in earlier trading when natural gas rose…

Gazprom’s Medvedev dismisses role of US LNG in European natural gas market

25 Jan 2017   LNG, Russia

Russia is the gas supplier of choice for European markets and will remain the most cost-effective and reliable source of gas in Europe, Alexander Medvedev, Gazprom’s deputy CEO, said Tuesday. Speaking at the European Gas Conference in Vienna, Medvedev said US LNG had been a “big hope” for Europe, but that the record flows of Russian gas to Europe in 2016 — almost 180 Bcm — were evidence of Russia’s position as the leading gas supplier to its European partners. “Russia is the only gas supplier that can reliably and flexibly supply gas in any amount. We can supply whatever Europe wants — we have the capacity to supply an additional 150 Bcm/year,” he said. In an apparent reference to US LNG exports starting up in February last year, Medvedev said Europe had chosen Russian gas despite there being newer supply options. “Our clients have a variety of diversification […]

Why Cheap Natural Gas Is History

Natural gas prices averaged a little more than $2.50 per mmBtu (million British Thermal Units) in 2016. Those days are over. Prices will average at least $3.50 to $4.00 in 2017. Prices have more than doubled since March 2016 but gas is still under-valued. Supply is tight because demand and exports have grown and shale gas production has declined. In April of last year, I wrote that natural gas prices should double and they did. Henry Hub spot prices increased 2 1/2 times from $1.49 to $3.70 per mmBtu and NYMEX futures prices doubled from $1.64 to $3.30 per (Figure 1). (Click to enlarge) Figure 1. Natural Gas Prices Have More Than Doubled Since March 2016: The Days of $2.50 Gas Are Gone. Source: EIA and Labyrinth Consulting Services, Inc. Nevertheless, gas prices are still too low. Storage was at record high levels throughout 2016 reaching 4.1 Bcf (billion […]

U.S. gas market has eliminated storage surplus despite warm winter:

The U.S. gas market has tightened significantly over the last nine months as low prices have spurred strong consumption and exports while slashing drilling of new wells. The market has rebalanced despite an unusually mild winter so far, which points to the degree of underlying tightness and suggests prices will need to remain higher in 2017 than they were in 2016 to avoid a shortage. At the half-way point in the current winter heating season, working gas stocks in underground storage are 77 billion cubic feet (3 percent) below the five-year average. At the same point last year, stocks were 473 billion cubic feet (17 percent) above average, according to the U.S. Energy Information Administration. The storage surplus continued growing until it peaked at 874 billion cubic feet (54 percent) at the start of April 2016 ( tmsnrt.rs/2jGzkGy ). Since then, however, the surplus has shrunk thanks to a […]

Natural Gas Flips to Gains After Stockpile Data

Natural gas prices rose Thursday, flipping up from losses after data showed a larger-than-expected drain from storage last week. The U.S. Energy Information Administration said natural-gas stockpiles shrank by 243 billion cubic feet in the week ended Friday. Analysts and traders surveyed by The Wall Street Journal forecast a drain of just 229 bcf and the five-year average for this week of the year is just 170 bcf. The report…

Cruise Line Exec: LNG Represents the Future

12 Jan 2017   LNG

Carnival opting for LNG instead of marine diesel oil. As this series on natural gas utilization has shown, initiatives to develop new markets for abundant natural gas supplies are prompting significant changes within the realms of power generation and transportation . In some cases, the effects of these changes will be evident to end users. For instance, residents of communities previously isolated from the natural gas grid may soon notice new pipeline infrastructure or shallow-draft liquefied natural gas (LNG)-laden ships and barges. Also, employees of organizations switching to natural gas-powered vehicle fleets likely will detect some minor differences in how they refuel cars, trucks and buses with compressed natural gas or LNG compared to gasoline or diesel. A major player in one high-profile industry recently unveiled plans to begin switching to natural gas, but its customers likely won’t notice a difference – and that’s fine with the company devoting […]

EIA sees natural gas production up nearly 4% a year to 2020

The US Energy Information Administration’s Annual Energy Outlook 2017 is projecting growth in natural gas production from now until 2050, and sees gas exports helping drive the US to switch to being a net energy exporter by 2026. Gas production “is actually going to go up quite a bit, with relatively low and stable prices,” supporting higher levels of domestic consumption, especially in the electric and industrial sectors, EIA Administrator Adam Sieminski said in a briefing on the annual report Thursday. EIA’s outlook examined eight cases in making projections for energy markets, this year extending those out to 2050. It looked at a reference case that assumes current regulation and central views of economic forecasters, as well as some improvement in known technologies. It also examined cases that assumed low and high economic growth, low and high oil prices, low and high oil and gas resource and technology, and […]

Gas Producers Fall Even as Gas Prices Rise

Fear and trembling over the return of oversupply in natural gas The new year started off terribly for one of 2016’s best-performing commodities, reinforcing fears that have lingered over the market for months. Natural gas lost nearly 10% in one day, its worst in nearly three years. It was a rare downer for gas. The commodity had doubled in price since March and finished 2016 up […]

US natural gas market feels the heat from mild January outlook

The prospect of a mild January has throttled the US natural gas market, pushing benchmark prices down in the biggest daily decline in almost two years.  The 10.7 per cent fall in Nymex February gas futures, to $3.327 per million British thermal units on Tuesday, reversed a furious rally in gas futures that began in November. The uses of natural gas include power generation, manufacturing and fertiliser, but demand typically peaks during the winter heating season.

Investors had flocked to gas futures amid sub-zero temperatures in cities such as Chicago and Minneapolis last month. As of late December, hedge funds held record net bullish positions on gas contracts listed at the New York Mercantile Exchange and Intercontinental Exchange.  While more chilly weather is expected this week, gas prices dropped “as the temperature outlook has turned noticeably warmer than a few days ago”, said Tim Evans, energy analyst at Citigroup. Government forecasters say above-normal temperatures could extend across much of the country into the second half of January, typically the coldest month of the year.

Freezing Winter Sees Natural Gas Prices Surge

Natural gas prices are surging as cold weather eats into U.S. inventories, tightening the market much more quickly than many analysts had expected. The blast of Arctic weather in December put a strain on natural gas markets, with millions of people cranking up the heat to keep warm. The EIA reported a surprise drop in storage levels in the week ending on December 16, falling by 209 billion cubic feet. That decline puts total storage levels at 3,597 Bcf, or just a small 78 Bcf above the five-year average. (Click to enlarge) Such a scenario was difficult to imagine earlier this year, when the U.S. was emerging from peak winter demand season with record levels of gas sitting in storage. Flush with supply, prices crashed below $2/MMBtu. But natural gas production suddenly started to fall after years of blistering growth, upending forecasts calling for years of oversupply. Meanwhile, demand […]

US LNG makes negligible impact on European gas market

27 Dec 2016   Europe, LNG

The startup in February this year of US LNG exports based on cheap American shale gas had been expected to see a good proportion of cargoes heading across the Atlantic to Europe given the relatively short shipping route and Europe’s massively underused LNG import capacity. But with European gas prices staying stubbornly low for most of the year and the margins for US LNG having been largely eroded due to the slump in global LNG prices, in the end only a handful of cargoes ended up in Europe. As 2016 nears its end, more than 50 cargoes have left the Cheniere Energy-operated Sabine Pass terminal in the Gulf of Mexico for international markets. But of those cargoes, just three landed in mainland Europe — one in Portugal, one in Spain and one in Italy — while another two shipments were made to Turkey. According to industry sources, the two […]

Finding Work For The World’s Largest LNG Ship

26 Dec 2016   LNG

It is not just individual investors that are having to be patient and bide their time waiting for energy sector investments to pay off. Many corporations are making long term bets in the energy sector, and those bets are taking a while to show their value as well. Take one recent investment from Mitsui O.S.K. Lines – a massive $400 million floating liquefied natural gas factory. The enormous ship is different than most LNG tankers in that it not only carries LNG, but also turns it back into gaseous fuel avoiding the need for an expensive on-land terminal. The vessel is termed a floating storage regasification unit or FRSU. In other words, the ship is a complete end to end fuel delivery system. Mitsui’s ship is also enormous. It is more than 900 feet long – longer than 3 football fields – and it can store enough LNG to […]

Shale Gas Is Back With This $2 Billion Acquisition

24 Dec 2016   Shale Gas

A nearly $2 billion natural gas deal could signal a sign that companies are interested in gas drilling again after a long downturn. Gulfport Energy announced plans to issue new shares in order to finance a $1.85 billion acquisition of acreage in Oklahoma’s SCOOP basin. The SCOOP has emerged as arguably the next most exciting shale play, with acreage still largely undeveloped. The Marcellus and Utica Shales in Pennsylvania and Ohio have been home to the bulk of the shale gas revolution, although Oklahoma has seen years of shale gas drilling as well. Now with the Marcellus having been poked with tens of thousands of wells, natural gas drillers are moving on to greener pastures. The rig count outside of the handful of major shale basins is now at its highest level in almost a year. Adding fuel to the fire is the recent rise in natural gas prices, […]