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Pipeline to the Future

US Natural Gas Output Will Set a Record This Year

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price


NOAA 6 to 10 Day Outlook
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.


Pipeline to the Future

The Worcester Telegram & Gazette | June 12, 2014

A natural gas pipeline expansion project whose Massachusetts segment would run from Richmond to Dracut and cross many north-central Massachusetts towns, is drawing opposition even before its proponent has formally filed plans for it.

Kinder Morgan hopes to construct the line in order to bolster the supply of natural gas to Boston and New England, but many communities have already passed non-binding resolutions against it. And while more than a third of property owners contacted by the company or its agents have granted permission for their property to be surveyed, some are raising objections.

The concerns include a desire to protect family farms, open space, and natural habitats, as well as opposition to gas that is obtained by hydraulic fracking.

On the legal side, local and state authorities have limited powers to block energy transmission lines, which are under the purview of the Federal Energy Regulatory Commission.

And, as a practical matter, opponents will need to present better arguments than they have so far. Pleading for more renewable sources for electricity, as well as more conservation, is fine, but New England's appetite for gas is growing.

According to ISO New England's 2013 Regional Electricity Outlook, more than 85 percent of generating capacity built in New England in the last 15 years was natural gas combined-cycle units. Natural gas, which in 2000 accounted for just 15 percent of the energy "pie" for meeting electricity needs, today is near 50 percent.

Some of those opposed to gas pipelines have also fought to shut down coal-fired power plants, and the region's nuclear power plants. They must realize that meeting energy demands is not a game in which one side wins by banning particular sources of power while showing cleaner alternatives would be better.

Everyone agrees coal-fired plants should be phased out, and that solar and wind energy are fuels of the present and future. But any reasonable analysis of changing energy patterns shows that natural gas has played the key role in New England's success in meeting energy demands while reducing the greenhouse gas emissions.

Energy producers and pipeline companies can take care of themselves just fine. Federal regulators will enforce the rules. And local communities and property owners can and should advocate for their own best interests.

We suggest, however, that communities and individuals whose instincts are to reject pipeline projects take a long, hard look at the kind of economy and energy future they want to see.

Just saying no while waiting for the sun and the wind to take up all the slack is likely to hamper New England's growth and progress. Acknowledging that each source of energy has a role to play, and working with industry and regulators toward expansion that is appropriate in scale and location, is the wiser course.


US Natural Gas Output Will Set a Record This Year

Fuel Fix | June 12, 2014

U.S. natural gas output will reach 73 billion cubic feet a day for the first time this year as new pipelines tap into shale supplies stranded in the Marcellus formation in the Northeast, a new government report showed.

Marketed gas output in the lower 48 states will increase 4 percent from 2013, setting a record for the fourth straight year, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook, released Tuesday in Washington. The production estimate was raised from 72.26 billion in last month’s report as “several new projects to support Marcellus production have either recently come on line or will begin operations later this year,” the government said.

The EIA left its 2014 price outlook unchanged at $4.74 per million British thermal units as the gains in shale output are partly offset by increased gas use. Gas inventories fell to an 11-year low in March after a frigid winter spurred record demand and hampered production, according to the EIA.

“They show a pretty sizable increase this year and definitely a larger increase than what they envisioned,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “We’ve gotten used to such increases in supply but with such a shortfall in inventories, it probably is not enough to lower prices.”

Record production will help boost gas inventories to 3.424 trillion cubic feet by the end of October, which would be the lowest level at the start of the peak-demand heating season since 2008, Tuesday’s report showed.

Fuel demand

Demand for the fuel from electricity generators as well as industrial, commercial and residential consumers will increase about 1 billion cubic feet a day this year to average 66.36 billion. These consumers account for 91 percent of U.S. gas use.

Drilling technologies such as hydraulic fracturing, or fracking, have made it more economical to tap shale deposits. Gross output from the Marcellus field will average almost 15 billion cubic feet a day in July, up 26 percent from a year earlier, the EIA said Monday in its monthly Drilling Productivity Report.

“The report talks about projects that are largely already tied in,” and growth in the Marcellus is limited by a lack of infrastructure, Viswanath said. “Unless we see production gains out of the Haynesville or Permian Basins, which aren’t constrained, the new sources of supply are constrained and we will not likely see another production surge until later in November.”

Pipeline projects

TransCanada Corp.’s ANR Pipeline completed a project in April that began sending Marcellus gas west on its Lebanon Lateral in Ohio, the EIA said. The government also said that Spectra Energy Corp.’s Texas Eastern Transmission pipeline will bring 900 million cubic feet a day of capacity online to move gas out of Appalachia.

Dry gas production, which is equivalent to marketed gas minus extraction loss, will top 69 billion cubic feet per day for the first time this year, representing a gain of 3.7 percent from 2013, Tuesday’s report showed.

The surge in onshore production “has reduced the vulnerability of overall U.S. oil and natural gas supply to hurricanes” in the Gulf of Mexico, the government said. The share of gas output produced from the Gulf fell to 5 percent last year from 26 percent in 1997.

Natural gas futures for July fell 11.5 cents, or 2.5 percent, to $4.53 per million Btu on the New York Mercantile Exchange. Prices are up 19 percent from a year ago.

“We certainly know where the resource base is and the resource base is located in a region not well connected to the market,” Viswanath said. “The infrastructure challenge is simply what limits our ability to bring supply to the market.”

Natural Gas and Oil Market Update

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Natural Gas Prices Gain More Ground After EIA Data

MarketWatch | June 12, 2014

Natural Gas futures on Thursday gained more ground after the U.S. Energy Information Administration reported that supplies of natural gas rose 107 billion cubic feet for the week ended June 6. Analysts surveyed by Platts forecast an increase of between 109 billion cubic feet and 113 billion cubic feet. Total stocks now stand at 1.606 trillion cubic feet, down 727 billion cubic feet from a year ago and 877 billion cubic feet below the five-year average, the government said. July natural gas was at $4.67 per million British thermal units, up 16 cents, or 3.5%. It was trading at $4.54 before the data.


arrow upBrent, WTI Oil Prices Surge as Conflict Escalates in North Iraq

Bloomberg | June 12, 2014

Brent crude oil rose to the highest since the start of March and West Texas Intermediate to an eight-month high as violence escalated in Iraq, the second-largest producer in OPEC.

Brent rose as much as 2.2 percent to $112.34 a barrel. WTI, the U.S. benchmark, advanced 2 percent.

Brent for July settlement rose by as much as $2.39 and was at $112.09 a barrel at 1:57 p.m. on the London-based ICE Futures Europe exchange. The contract expires tomorrow. The European benchmark crude traded at a premium of $5.79 to WTI. The spread widened yesterday for the first time in four days to close at $5.55.

WTI for July delivery climbed as much as $2.13 to $106.53 a barrel in electronic trading on the New York Mercantile Exchange. WTI traded as high as $108.99 on Sept. 19. The volume of all futures traded was about 206 percent above the 100-day average. Prices have increased 8 percent this year.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report


Working gas in storage was 1,606 Bcf as of Friday, June 6, 2014, according to EIA estimates. This represents a net increase of 107 Bcf from the previous week. Stocks were 727 Bcf less than last year at this time and 877 Bcf below the 5-year average of 2,483 Bcf. In the East Region, stocks were 411 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 358 Bcf below the 5-year average of 962 Bcf after a net injection of 29 Bcf. Stocks in the West Region were 107 Bcf below the 5-year average after a net addition of 13 Bcf. At 1,606 Bcf, total working gas is below the 5-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price ($ per mmBtu)

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot
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