Prediction: The U.S. is Heading for NatGas Storage Crisis Next Winter

While the recent spike over the past week in natural gas prices was a fluke, an anomaly due to a rare snow and freezing cold event in the nation’s southwest and Midcontinent regions, the long-term price of natural gas has not moved all that much. The NYMEX futures prices for natgas month by month for the foreseeable future has stayed under or just above the $3/MMBtu mark. Yet we continue to see predictions of alarm that we’re heading for a natgas shortage and with it, a rise in gas prices.
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U.S. Senator Wants NatGas Price Spikes Investigated – Econ 101

It really is frightening how stupid some of our nation’s leaders really are. They don’t even understand basic economics 101 (they likely never took the class in college). Example: U.S. Sen. Tina Smith from Minnesota (Democrat) who wants federal regulators to investigate the recent spike in natural gas prices, which soared to record levels–into the hundreds of dollars per Mcf. Smith apparently doesn’t understand simple economics and the law of supply and demand.
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Cash NatGas Price in Oklahoma Hits $999/MMBtu; M-U Thru Roof Too

Just yesterday we told you about the craziness in natural gas prices in Oklahoma (and elsewhere, like Texas) that happened last Friday, when the cash price for natgas hit $600 in trading at one hub in the Sooner State (see Cash NatGas Price Goes Crazy in Oklahoma – Over $600/MMBtu!). Hang on! Yesterday the cash price at the same hub in Oklahoma hit $999! This is beyond crazy. And the high prices are now beginning to travel East, to the Marcellus/Utica. No, not THAT crazy, but we’re seeing prices at places like Dominion South and Tennessee Gas Zone 4 that we haven’t seen in, well, we can’t remember the last time we’ve seen prices this high.
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Cash NatGas Price Goes Crazy in Oklahoma – Over $600/MMBtu!

Supply and demand, that’s what it’s all about in a pure commodity market like natural gas. Supply and demand just about came off the rails last Friday in Oklahoma as the price of natural gas selling along Oneok Gas Transmission’s (OGT) 23 interstate and 20 intrastate pipeline connections entered the stratosphere. At one point the cash price for natgas in OK was fetching $600/MMBtu! No, this is not a joke. That’s the highest price paid for natgas…ever.
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NatGas Spot Prices Continue to Soar Across the M-U, Elsewhere

Yesterday we told you that natural gas spot (i.e. cash) prices at various pipeline trading hubs had hit fresh, one-year highs, including here in the Marcellus/Utica (see NatGas Spot Price at HH, M-U Trading Hubs Hits Fresh 1-Yr Highs). Guess what? It’s happened again, and with no end in sight. Due to the cold and snowy weather blanketing much of the country, natgas prices continue to soar–everywhere.
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NatGas Spot Price at HH, M-U Trading Hubs Hits Fresh 1-Yr Highs

The spot price (cash paid for immediate delivery) of natural gas at trading hubs across the country, including in the Marcellus/Utica, continues to hit new highs not seen in over a year. Even though the longer-range NYMEX futures price isn’t moving all that much. Pay no attention to the futures price! Look at the spot price. In the Henry Hub (Louisiana), the benchmark for all natgas prices, the spot price yesterday closed at $3.83/MMBtu, up $0.48 in one day. Dominion South closed at roughly $3.30/MMBtu, up $0.36 from the day before. And Tennessee Gas Zone 4 Marcellus closed at roughly $3.20/MMBtu, up $0.39 from the day before.
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Cold Weather, Snow Driving NatGas Spot Prices Higher Across U.S.

Reuters is reporting natural gas prices across North America have “soared” over the past few days as homes and businesses cranked up their heaters to escape a blast of arctic air and snow moving from Canada to the U.S. Midwest and northeast. The price of natgas trading at the Waha Hub in the Texas Permian Basin is at its highest since December 2018. Here in the northeast prices in Boston and New York City hit fresh one-year highs over the past few days. And it’s the same in Pittsburgh and northeastern PA.
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M-U Production May Decline with Wellhead Freezeoffs, Plunging Temps

Analysts at S&P Global Platts say that with the current cold snap underway in the northeast, already decreasing natural gas production from the Marcellus/Utica may accelerate with wellhead freeze-offs. Sometimes in colder temps (hey, it was 2 degrees at MDN HQ this morning) water and other liquids in the gas can freeze and block the flow of gas, called a wellhead freeze-off.
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NatGas, Elec Prices in Boston, NYC Continue to Soar – Lack of Pipes

Last week MDN told you about a spike in natural gas and electric rates in New York City and New England, thanks to the cold snap and lack of natural gas pipelines into the region (see NatGas Prices in Boston, NYC Double in One Day, Electric Up 55%). Natgas spot prices at Algonquin Citygate (Boston) had spiked to $9.69/Mcf. This week the price is up again–now at $11.97! It’s the same pattern for NYC.
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NatGas Prices in Boston, NYC Double in One Day, Electric Up 55%

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Although a true polar vortex has not yet visited the northeastern U.S. as previously predicted, temperatures in the northeast have fallen and are forecast to be the lowest so far this winter in the next few days. Due to lack of natural gas pipelines to New York and New England, the price for natural gas in both New York City and Boston almost doubled, literally overnight. The spot price for natural gas at the Iroquois Zone 2 trading hub (NYC) rose $5.79 (246% or 2.5x) from $3.96 to $9.75/MMBtu on Jan. 27–in just one day! Algonquin Citygate (Boston) jumped $4.92 (203% or 2x) from $4.77 to $9.69/MMBtu yesterday–in just one day!
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Dominion South, Tennessee Pipe Zn 4 Gas Prices Hit New 1-Yr Highs

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The spot price of natural gas selling at the benchmark Henry Hub in southern Louisiana has been creeping up ever so gradually, but it’s still nothing to write home about (closed at $2.75 yesterday). However, the spot price at two of our favorite M-U locations to track–Dominion South (in southwestern PA) and Tennessee Gas Zone 4 Marcellus (in northeast PA)–have rocketed in the past month, closing yesterday at their highest levels in more than a year.
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With Polar Vortex Coming, Boston & NYC May Need Russian LNG

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The last time a major polar vortex visited the northeastern United States was in January 2018, and it created such a huge demand for natural gas that Boston had to import Russian LNG to meet demand (see Confirmed: LNG Coming to Boston on Jan 22 is Illegal Russian Gas). Last January we had a cold snap but not a full-blown polar vortex, which almost caused New York City to import Russian LNG (see Will New York City Begin to Import Russian LNG Like Boston?). Guess what’s on the way to the northeast in about two weeks’ time?
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CEO of PetroNerds: What Lies Ahead for O&G in 2021

Trisha Curtis, PetroNerds

Trisha Curtis is president and CEO of PetroNerds, LLC. She was formerly the Director of Research, Upstream and Midstream, at the Energy Policy Research Foundation, Inc. (EPRINC). Since 2010, Curtis has led extensive research efforts and authored several reports on the North American upstream and midstream markets. She’s well-qualified to speculate about what lies ahead for the oil and gas sector in 2021.
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Henry Hub NatGas Price Averaged $2.05 in 2020, Lowest in >25 Years

The average price for natural gas at the benchmark Henry Hub in southern Louisiana was $2.05 per million BTUs (MMBtu) in 2020. That’s the lowest average annual price in at least 25 years, maybe longer. The U.S. Energy Information Administration (EIA) says while natgas usage rose in gas-fired electric plants, usage dropped for residential, commercial, and industrial users due to the ongoing pandemic.
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Blackmon’s Predictions for Oil & Gas Industry in 2021

David Blackmon is an independent energy analyst/consultant based in Mansfield, TX. Blackmon is a Forbes contributor and has a 39-year career in the oil and gas industry, most of it in public policy and managing regulatory and legislative issues for various companies, including Burlington Resources, Shell, El Paso Corporation, FTI Consulting and LINN Energy. Blackmon has been around the block a few times and understands not only the technical aspects of our industry, but the politics as well. He recently peered into his crystal ball and predicted what lies ahead (i.e. challenges) for the O&G industry in 2021, including a “regulatory onslaught” from Joe Biden…
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M-U NatGas Prices Highest in a Year with Coming Winter Storm

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Demand for natural gas in the northeastern United States, along with the spot price for gas, has surged over the past few days, for one simple reason: the weather. Those of us living in the northeast are about to get clobbered by a classic nor’easter snowstorm that’s due to drop two feet or more of snow in some areas of Pennsylvania. Here at MDN HQ we’re supposed to get at least a foot of snow over the next 24 hours!
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