LNG

The US benchmark Henry Hub natural gas spot price averaged $2.95 per million British thermal units in March, up 26 cents per MMBtu from February with increases caused by colder-than-normal temperatures and lower storage inventories, though prices are forecast to drop in the next year as output soars.

US liquefied natural gas exports rose in the past week even as feed-gas levels were lower and freezing weather in the Midwest and elsewhere increased domestic demand and led to a rise in pipeline imports from Canada.

LNG exports rose to seven shipments, six from Sabine Pass in Louisiana and one from Cove Point in Maryland, compared with six the previous week, while one vessel was lifting a cargo at Sabine Pass through January 31.

“Natural gas feedstock deliveries to US liquefaction facilities have decreased during the past two weeks and averaged 3.9 billion cubic feet per day compared with an average 4.9 Bcf/d from January 1 to January 15,” according to the weekly report from the Energy Information Administration.

“The Corpus Christi terminal has not had any feedstock deliveries since January 20, when the facility exported its first five commissioning cargoes,” noted the EIA.

Domestic natural gas demand surged, driven by the residential and commercial sectors amid the freezing weather.

“In the residential and commercial sectors, consumption increased by 11 percent, reaching a near-record high of 70.9 Bcf per day on January 30, the second-highest value ever recorded (the highest was 71.6 Bcf per day in January 2014),” stated the report.

The EIA said that supply remained flat. “The average total supply of natural gas remained the same as in the previous report week, averaging 94.0 Bcf per day,” said the report.

It noted that average net imports from Canada increased by 7 percent from the previous week because of the cold weather.

On the regional price front, there were rises in the Midwest and Chicago regions because of the historically cold weather.

Northeast prices were also higher, while the benchmark Henry Hub price declined 14 cents on the week to $2.96 per million British thermal units.

“A polar vortex blanketed the Midwest and Northeast at the end of the report week,” said the EIA.

“At the Chicago Citygate, the most heavily affected major trading hub, prices increased $1.88 per MMBtu from $3.11 per MMBtu to $4.99 per MMBtu with a weekly high of $7.46 per MMBtu on January 29,” added the report.

Prices rise sharply in Northeast cities during the polar vortex. At the Algonquin Citygate, which serves Boston, prices went up $5.57 from $3.53 per MMBtu to $9.10 per MMBtu after reaching a weekly high of $10.04 per MMBtu.

“At the Transcontinental Pipeline (Transco) Zone 6 trading point for New York City, prices increased $9.53 from $2.98 per MMBtu to their weekly high of $12.51 per MMBtu,” said the report.

Shale-gas prices in the Appalachian region also rose though at a slower pace. Tennessee Zone 4 Marcellus spot prices increased 16 cents on the week to $2.92 per MMBtu.

“Prices at Dominion South in southwest Pennsylvania rose 22 cents to $2.94 per MMBTU,” said the EIA.

In the storage report, net withdrawals from storage totaled 173 Bcf for the week ending January 25, compared with the five-year (2014-2018) average net withdrawals of 150 Bcf and last year's net withdrawals of 126 Bcf during the same week.

“Working gas stocks totaled 2,197 Bcf, which is 328 Bcf lower than the five-year average and 14 Bcf lower than last year at this time,” added the report.

US natural gas production rose to an average of 86.9 billion cubic feet per day in October and despite low storage levels, the government expects strong growth in US gas output to put downward pressure on prices in 2019.

The US state of New Mexico is on track to set record revenues from the online sale of tracts of land with oil and natural gas leases for the Permian Basin resources on its territory.

The US expects rising natural gas production will support the forecast surge in LNG and pipeline exports in next 12 months as well as re-establishing storage levels after the smallest April injections for inventories since 1983.

US liquefied natural gas shipments were steady in the past week with five cargoes departing the Sabine Pass plant in Louisiana, while the Cove Point facility in Maryland formally started commercial operations as US domestic demand rose along with pipeline exports to Mexico.

April 11 (LNG) - The US benchmark Henry Hub natural gas spot price is expected to average $2.99 per million British Thermal units in 2018 and $3.07 per MMBtu in 2019, according to the latest short-term outlook from the US Energy Information Administration. US dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017. “The EIA forecasts dry natural gas production will average 81.1 Bcf/d in 2018, establishing a new record,” said the report. It also forecasts natural gas output will rise by 1.7 Bcf/d in 2019. “Growing US natural gas production is expected to support both growing domestic consumption and increasing natural gas exports,” said the report. Natural gas inventories at the end of March, considered to be the end of the US winter heating season, were estimated to be almost 1.4 trillion cubic feet, which was 19 percent lower than the previous five-year average.

US domestic natural gas consumption dropped by 5 percent during the week and prices were mixed as LNG exports remained flat and average net pipeline imports from Canada decreased by 2 percent.

As US LNG exports gather pace over the next year, the US government said the nation’s dry natural gas production will average 81.7 billion cubic feet per day, establishing a new high and that level would be 8.1 Bcf/d higher than in 2017 and the highest annual average growth on record.

US LNG exports increased in the past week with six LNG carriers departing the Sabine Pass plant in Louisiana while another was lifting a cargo as overall US consumption of natural gas rose by 13 percent.