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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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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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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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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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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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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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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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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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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By now it’s a cliche to say that 2020 has been an exceptional year–and not in a good way. For the first time in our memory of writing MDN, we witnessed widespread curtailments or “shut-ins” of wells in the Marcellus/Utica during 2020. That is, drillers voluntarily turned the values off and flowed less gas in a bid to (a) not sell the gas at prices that don’t return a profit, and (b) drive up the price of gas (see M-U Shut-ins Help Keep Regional Gas Prices Stable…for Now). Will that trend continue in 2021?
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Although in recent months a number of major Marcellus/Utica drillers have shut-in (or curtailed) some of their natural gas production, apparently those days are over. According to an analysis by S&P Global Platts, M-U gas production in December has (so far) averaged nearly 33.9 Bcf/d (billion cubic feet per day), making December’s month-to-date average the highest on record. In fact, on Dec. 7, two days ago, regional output in the M-U was estimated at 34 Bcf/d, less than 300 MMcf/d below its all-time, single-day record high. What’s going on?
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Earlier this week the NYMEX natural gas futures contract for December rolled off and the January contract became the “front contract” being traded. The latest storage numbers–how much gas has *not* been withdrawn from storage–combined with weather forecasts and computerized trading to hammer prices. Natgas was down 10 cents on Wednesday, and down another 27 cents yesterday, for a combined 37 cent loss over the past two days. Yuck. But it’s not all bad news, at least here in the Marcellus/Utica.
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Once again the price of natural gas traded on the Henry Hub in south Louisiana, the NYMEX December futures contract, has tanked. The price fell $0.30 yesterday to close at $2.70/Mcf. There were two primary reasons why: (1) The U.S. Energy Information Administration (EIA) released a storage report last Friday showing storage levels are near record-highs (too much supply), and (2) longer range weather models show temps staying warm (not enough demand).
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We’ve been tracking the daily price of the NYMEX December futures contract at the South Louisiana Henry Hub on and off for the past few months. Yesterday it closed down again, at $2.86/Mcf (or MMBtu). However, the “spot price” for gas–actual physical gas bought and sold at various trading points along pipelines–has all but crashed and burned in the Marcellus/Utica. It’s bad. Like, historic record low bad.
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Last week we were jazzed when noticed the price of natural gas at the NYMEX Henry Hub had soared, up over $0.30 to $3.30/Mcf (see NYMEX Henry Hub NatGas Price Shoots Up to $3.30 for December). Apparently what goes up that quickly can down just as quickly. Yesterday the price closed at $3.05/Mcf. Why?
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When checking the NYMEX futures price for natural gas, which is based on the spot price at the Henry Hub in southern Louisiana, we had a surprise. Just a few days ago the NYMEX was showing right around $3 per million BTUs (or per Mcf, thousand cubic feet). Yesterday the price closed at $3.30/Mcf. Why the huge jump?
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