Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised today that there was a draw of 58Bcf from Underground Storage for the week ending 12/27/19.

This is 1Bcf above the forecast of a 57Bcf draw, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. This compares with a draw of 24Bcf last year and a 89Bcf draw for the five-year average. Storage is 484Bcf above last year for the same week and 89Bcf below the 5-year average. Working gas in storage stands at 3,192Bcf. (Read More...)

Natural Gas Pricing


As of 12:41PM CST, February 2020, (the new prompt month) Natural Gas was trading at $2.13, -$0.07 from one week ago and the 1-Year Spread average was $2.30, +$0.02 from one week ago.

Crude Oil Pricing


As of 11:55AM CST, February, 2020, (the new prompt month) Light, Sweet Crude on the NYMEX was at $62.57, +1.99 from one week ago.

Crude Oil Inventory


US crude inventories (EIA) decreased by 11.5 million barrels to 429.9 million for the week ended December 27th, according to data released this morning by the US Dept of Energy. Traders in the Reuters poll projected a draw of 3.3 million barrels.

U.S. Rotary Rigs


According to the Baker Hughes Count, US Rotary Rigs targeting Natural Gas were unchanged at 125 for the week ending December 27th and -73 from last year.

Rigs targeting Crude were -8 at 677. There are 208 fewer rigs targeting oil than last year. Canadian Rigs were -50 at 99 and +29 from last year. US Rigs drilling remain at 84% of all drilling activity.

Geopolitical 


The United States and China have spent more than 40 years building a relationship by increasing their economic, academic and political connections — a bond that even withstood the 1989 Tiananmen Square protests. But the relationship is now so frayed, concerns exist that it may never fully heal.

The election of Donald Trump to the presidency and the fervor with which he brought to fair and open trade is at issue. While it is no doubt an honorable goal — and one pursued by every president since Richard Nixon — the tariffs that he has implemented on Chinese exports have hurt American businesses and have done lasting damage to the 40-year courtship between the two nations.

“We find that U.S. manufacturing industries more exposed to tariff increases (have) experienced relative reductions in employment (because of) rising input costs and retaliatory tariffs,” write Federal Reserve economists Aaron Flaaen and Justin Pierce. “Higher tariffs are also associated with relative increases in producer prices via rising input costs.”

The political price on Trump is taking its toll, costing him, perhaps, some support among natural gas and oil developers who fear that they may lose access to China that needs oil and gas to grow its economy. As Chinese leaders have emphasized, they can get those natural resources from regions that, logistically, make more sense: Australia, Qatar and Russia, which is already working with China to build pipelines and to supply oil. And once China signs new long-term contracts with other suppliers, it will be too late for American producers (Read More ...)

Weather

The AccuWeather Pro 1-5 Day Outlook forecasts above-normal temps for the entire US with the exception of the Southwest, which is expected to be at normal temps.

The 6-10 Day Outlook forecasts above-normal temps for the Eastern half of the country and the Far-Northwest. Arizona and Utah are expected to be at below-normal temps with the balance of the country at normal temps.

The 11-15 Day Outlook forecasts above-normal temps for the Eastern half of the country while the Western half is expected to be at below-normal temps.

The 30-Day Outlook shows normal temps for  the entire US with the exception of Georgia and Northern Florida, as well as the Far-Northeast which are projected to be above-normal. Additionally, the North Central states and Western Great Lakes area are projected to be below-normal.

The 90-Day Outlook shows normal temps for most of the country, except for parts of Oregon, Idaho, Northern California and Washington state, which are expected to be at above-normal temps. Additionally, the Great Lakes area and Northern parts of the Northeast are expected to be at below-normal temps.

Severe Weather: The warmth and humidity from the tropics can periodically splash northward into the lower Mississippi Valley and near the Southeast coast as low-pressure systems cross the country. Alabama had 139 January tornadoes in the 69-year period from 1950 to 2018. That's more than occurred in six other calendar months (Read More ...)

Sustainable and Renewable Energy   


To Store Renewable Energy, Try Freezing Air: The system that supplies clean electricity to Vermont is not exactly a model of Yankee ingenuity. Such energy storage technology could help relieve congested transmission lines in places like Vermont.

In 2011, the state adopted a plan to get 90% of its power from renewable sources by 2050. That led to a surge of wind-generated power from the northeastern part of the state and an expansion of solar.

But transmission lines in this sparsely populated part of Vermont have such low capacity that much of the renewable energy is often unavailable because the lines are too congested. The state was deprived of another form of emission-free power in 2014 when an aging nuclear power plant called Vermont Yankee was permanently shut down.

So what can Vermont do? A British company called Highview Power proposes a novel solution: a storage system that uses renewable electricity from solar or wind to freeze air into a liquid state where it can be kept in insulated storage tanks for hours or even weeks.

The frozen air is allowed to warm and turn itself back into a gas. It expands so quickly that its power can spin a turbine for an electric generator. The resulting electricity is fed into transmission lines when they are not congested.

"Vermont has transmission issues," explained Salvatore Minopoli, vice president of Highview's USA affiliate. "It's a situation that many places in the U.S. are dealing with where renewable energy is being deployed more and more. It's power that's intermittent. They need something to balance their system out."

Minopoli said that "the longer duration of your energy storage, the more economical it is for a Highview system," rather than using big electric storage batteries.

For years, utilities have tried other non-battery approaches. One is pumped storage, where utilities use electricity to pump water uphill (Read More ...)

This Week's Key Take-Away


Summary
  • The weight of the Electric Power sector in the natural gas market continues to grow.
  • NG/Coal spread has declined, meaning that natural gas became more competitive (vs. coal) as a "feedstock" for electricity generation.
  • Coal-to-gas-switching currently stands at around 6.7 bcf/d, some 1.1 bcf/d above five-year average and 1.2 bcf/d above last year's level.
  • Wind, hydro, and solar generation can displace no less than 3.0 bcf/d of potential natural gas consumption in the Electric Power sector in January.
  • Total natural gas balance in January is currently projected to be looser than last year by around +4.9 bcf/day.
The Electric Power sector is the primary consumer of natural gas in the US. Its share in the annual demand structure is more than 31%, while its share in the injection season demand is close to 50%.

The latest data indicates that the weight of the Electric Power sector in the natural gas market continues to grow. The EIA's latest Electric Power Monthly Report shows that in October, the share of total electricity supplied by natural gas-fired power plants has increased by more than three percentage points y-o-y, from 38% to 41.5%. It was the largest share of natural gas-fired generation ever recorded in the month of October. At the same time, the share of coal-fired generation has dropped by more than six percentage points over the same period to 21%.

These latest trends are important for several reasons. Firstly, the share of natural gas usage for electricity generation increased even as the total electric output went down. According to Edison Electric Institute, US produced 322 TW/h of power in October 2019, some 0.9% less than a year ago. Secondly, natural gas remained the fastest-growing source of power among all other sources (not just compared to coal). The share of renewables (hydro, wind and solar) has also increased in annual terms, but to a lesser extent.