NatGas Trading in NYC Hits $175/Mcf – Highest Ever Recorded!
Brrrr! If you live anywhere in the northeastern part of the country, you’re likely bundled up sitting at home, or bundled up sitting at work. Most schools dismissed today because of the brutally low wind chill values–minus 30 degrees Fahrenheit in upstate NY where MDN is headquartered. Over the past couple of days MDN has highlighted the news that with this latest winter ‘bomb cyclone’ as it’s called, the lack of natural gas pipelines to New England–to feed both homeowners who heat with gas and utilities that use gas to generate electricity–can no longer be ignored. Two days ago we told you that New England now has the dubious distinction of paying the highest average price for natural gas in the entire world (see New England’s Lack of Pipelines = Most Expensive Gas in the WORLD). Yesterday we told you that at least part of the blame for New England’s sky high natgas prices can be laid at the feet of New York Gov. Andrew Cuomo (see New England Can “Thank” NY Gov. Cuomo for Sky High NatGas Prices). However, lack of pipelines doesn’t only affect New England states, it also affects New York itself. Yesterday history was made when the spot price for natural gas in New York City hit an amazing $175 per thousand cubic feet (Mcf) at the Transco Zone 6 New York trading hub. Incredible! In Boston, at the Algonquin City Gate trading hub, the spot price briefly hit $105/Mcf! Below we have the news about these record-breaking prices from the natgas price experts–Natural Gas Intelligence (NGI). Each weekday NGI publishes their MidDay Price Alert by 1 pm Central, both emailed and available at this webpage: www.naturalgasintel.com/middayprices. The MidDay Price Alert, which includes Intercontinental Exchange trade data, gives gas traders (and those with a keen interest in prices) the latest intel on what’s happening with prices at 125+ trading hubs across the country. Here’s what yesterday’s MidDay Price Alert showed for trading in the northeast… Read More “NatGas Trading in NYC Hits $175/Mcf – Highest Ever Recorded!”
As we pointed out earlier this week, New England now has the dubious distinction of paying the highest prices for natural gas–in the world (see 
Baby it’s cold outside! This was predictable (and indeed, MDN did predict it). With the arrival of an extended cold period, because of a lack of natural gas pipeline capacity in New England, recent spot prices for natgas near Boston have spiked to more than $35 per thousand cubic feet (Mcf). It gives New England the dubious distinction of paying the highest average price for natural gas in the entire WORLD. The price for the same gas about 250 miles away in the Marcellus? Between $1-$2/Mcf. And yet the dunderheads in New England, like U.S. Sen. Elizabeth “Pocahontas” Warren, continue to block new pipelines in the region. “Stupid is as stupid does,” as Forrest Gump said. We hope our friends in New England enjoy paying through the nose and every other orifice they possess over the next few weeks, until the arctic blast subsides…
American shale has fundamentally transformed the world geopolitically. How? Just think about. #1 – Saudi Arabia and Iran are on the brink of all-out war. For decades Saudia Arabia has been the world’s leading oil producing country. Iran has been in the top five oil producing counties. #2 – Venezuela, the country with the world’s largest oil reserves, is rumored to have defaulted on its foreign debt. Either situation, #1 or #2, hint at the potential for the flow of oil to be disrupted. Both happening at the same time is an oil cataclysm. A decade ago such news would have resulted in oil hitting $100, perhaps even $150 per barrel. The price of gas at the pump would have soared, overnight, to more than $5/gallon. Yet what has happened to the price of oil with this recent geopolitical news? Nothing. If anything, the price has gone down! The only reason oil prices are not through the roof is because of the abundance of American shale oil. An occasional guest blogger here on MDN is Daniel Markind, a partner with law firm 
Last week the Federal Energy Regulatory Commission’s (FERC) Office of Enforcement (OE) released their 2017-18 Winter Energy Market Assessment, an annual look ahead to the coming winter. OE shares their thoughts and expectations about market preparedness, including an assessment of risks. What does the report show? OE says production is going up (increasing another 5 billion cubic feet per day by next April), natural gas in storage is “robust” (meaning high), and the upcoming winter weather looks to be warmer than normal in most of the country, including the northeast. Translation: Don’t expect the price of natural gas to spike this winter. Prices will remain relatively low. Here’s the full OE report (interesting reading, pretty charts)…
With new pipelines coming online in the Marcellus/Utica, will the price of natural gas bought and sold at regional trading points, like Dominion South and TGP (Tennessee Gas Pipeline) Zone 4 go higher? It certainly makes sense that with more of our gas flowing out of the area, there will be less gas left in the area and therefore will fetch a higher price. In fact, just after Energy Transfer’s Rover Pipeline, now in partial service, began to flow, the price of gas at the Dominion South hub jumped 31% (see 
Once upon a time the Environmental Defense Fund (EDF) held out the veneer of practical environmentalism–people who would at least listen to the fossil fuel industry and in some rare cases, reach their hand across the isle to work on initiatives with the industry (for example, they are a partner in the Pittsburgh-based Center for Responsible Shale Development). But over the past few years that veneer has been stripped off, and now the EDF has been exposed as a hack organization, just like all the rest of the loons on the left. Case in point is their latest propaganda, issued last week. The EDF published a “report” that makes the rather preposterous claim that New England customers have overpaid utility bills by $3.6 billion due to collusion between the natural gas and electricity industries. EDF spins the outlandish theory that Avangrid and Eversource brilliantly conspired to create Enron-style fake gas shortages involving a whopping 3.5% of the capacity of the Algonquin pipeline–all in order to drive up electric clearing prices for a wind farm Avangrid didn’t yet own, a rarely dispatched Avangrid oil peaker run under rate of return, and three crappy, rarely operated oil and coal plants in New Hampshire–plus nine little hydro dams that Eversource was trying to unload for years (finally sold last week). EDF’s tall tale is so bizarre (and hard to follow) it’s laughable. However, mainstream fake news media picks it up and regurgitates it to an unsuspecting public, so we’re here to set the record straight on yet another Big Green hoax…
Each year the consultants at Deloitte conduct a survey of oil and gas industry professionals. Last year the survey showed o&g execs believed we were already in the midst of a recovery for the industry (see 
According to experts speaking at the Platts Houston Energy Forum held yesterday, new pipelines going into service in the Marcellus/Utica region are having an effect. Pipeline constraints–not enough capacity to get the gas to markets outside of the region–are easing. Prices in some areas of our region where gas is bought and sold are improving (going up), but prices still have a long way to go. Perhaps the biggest eyeopener is that at least in the near-term, we may end up having more pipeline capacity than gas to fill it. By next spring, another 4.57 billion cubic feet per day (Bcf/d) of new pipeline capacity will go online: Access South and Adair Southwest projects on Texas Eastern Transmission will add another 520 million cubic feet per day (MMcf/d); Leach XPress on Columbia Gas Pipeline will add 1.5 Bcf/d; Rover Pipeline will get finished, bringing online an additional 2.55 Bcf/d (on top of the existing 700 MMcf/d flowing now). Here’s what the experts had to say about what’s coming down the pike in our region over the next year or so…
The greater the risk, the greater the reward. You’ve heard that bromide multiple times in your life. And for good reason–it’s true. Our entire stock and financial markets are based on that truism. Gas traders, those who trade futures contracts for natural gas, are like any other traders–they big price swings. It is when the price of the underlying commodity swings that (i.e. when risk rises) that traders make the most money. Don’t know if you’ve noticed, but the price of natural gas hasn’t really swung much at all over the past few years–at least at the Henry Hub, which is where most contracts are pegged. Why? We have a “glut” of natural gas. As soon as the price creeps up a bit, more gas floods the market. But as we’ve written many times in the past, there isn’t just “one price” when it comes to natural gas. There are hundreds of prices–gas is traded at hundreds of different trading points along major pipelines across North America. While the price of gas is steady and doesn’t change much (i.e. no real opportunity to profit from risk) at Henry Hub, such is not the case at all trading hubs. Particularly in the Marcellus/Utica. In our region, prices have been much lower than the Henry Hub–and much more volatile. Wider swings up and down. Now that Rover is flowing, prices are going up in some areas of our region. Other pipelines have a similar effect. So gas traders are beginning to leave contracts pegged to Henry Hub behind and trying their hand at contracts pegged at other trading hubs–some in our region, some in other regions. Bloomberg gives us the low down on a trend that has the power to affect the price of natural gas across the country–particularly in our region…
Every now and again it’s helpful to step back and look at the big picture, in particular with respect to major pipeline projects. These projects have a deep and profound effect on drilling. In fact, the addition of just three pipelines in our region (currently under construction) will fundamentally change the price of gas in the Marcellus/Utica region–and ultimately lead to more drilling. How so? As part of an article on the Seeking Alpha investor’s website, author and investor Callum Turcan wrote about “Why Appalachia Matters” in which he details that three pipeline projects already getting built will provide an extra 6.45 billion cubic feet per day (Bcf/d) of capacity to flow our natural gas out of this region to other regions. Some of that capacity is already happening, with a partial startup of Rover Pipeline. When Rover is completed in early 2018, it will flow 3.25 Bcf/d of natural gas out of our region. Massive! In addition, Atlantic Sunrise is now under construction and when it is completed by the middle of 2018, it will flow 1.7 Bcf/d of gas out of the area. Finally, Leach XPress is due to be done by the end of THIS YEAR, and when it is, it will flow an extra 1.5 Bcf/d of gas out of the area. What will be the response? It’s pretty easy to predict that (a) prices for our gas will go up, and when prices go up, (b) drillers will complete wells already drilled but not yet completed (DUCs), and then (c) begin to drill more new wells. Those three pipelines aren’t the only ones that will get built…
Phase 1A of the Rover Pipeline has been online for less than a week (see 
Four Texas Eastern Transmission (Tetco) pipeline projects are expected to be completed by the end of this year and when they are, they will together flow an extra 1 billion cubic feet per day of Marcellus/Utica gas to more profitable markets in the South, as far away as the Gulf Coast. The four Tetco projects are: Gulf Markets Expansion Phase 2, Access South, Adair Southwest and Lebanon Extension. As fate would have it, Tetco experienced a fire while drilling under a highway for what we believe is the Adair Southwest project (see today’s companion story, Tetco Pipe Drilling in Athens, OH Hits Gas Pocket, Catches Fire). Three of the four projects–Access South, Adair Southwest and Lebanon Extension–are part of the same umbrella filing with the Federal Energy Regulatory Commission (FERC). Those three together will flow an extra 662 million cubic feet (MMcf) per day of gas to Ohio, Kentucky and Mississippi. Some of that gas will then catch a ride on the Gulf Markets Expansion Phase 2, flowing gas to Louisiana and Texas. Here’s the exciting part: Some of that gas will go to LNG export facilities, and some will go by pipeline from Texas to Mexico. Cool! Marcellus/Utica gas finding its way to other countries via the Tetco pipeline. Which means some Marcellus/Utica drillers will get higher prices for their gas. Here’s an update on Tetco’s four pipeline projects combining to boost prices in our region, and carry our gas to other parts of the world, and which drillers will benefit…
Yes, lack of pipelines in the Marcellus/Utica does hurt many people and businesses. When drillers can’t get their product to markets that fetch higher prices, the existing markets where they sell becomes saturated and the price drops. That means less money in royalty payments for landowners, less money in the pockets of drilling companies, less drilling until prices go up again, fewer jobs, less tax revenue flowing to the state and municipalities. Etc. You get the idea. It also can impact those who trade natural gas futures. Ginormous investment bank Goldman Sachs markets and trades natural gas–one of the world’s biggest natgas traders. The company “bet wrong” on which way the price of gas would go in the Marcellus/Utica, believing it would go higher with projects like Rover Pipeline coming online. Instead, Rover and other projects in our region hit obstacles and delays. And the price of gas stayed low. It cost Goldman $100 million this spring–turning in the worst performance ever for its commodities trading unit. Yes, we understand, it’s hard to shed a tear for a big company like Goldman. After all, they were rolling the dice in the Wall Street casino. Our point remains: When pipelines don’t get built, there’s a very real cost associated–a cost that ripples throughout the economy from the biggest players (Goldman) to the smallest players (landowners)…
Pipelines make a HUGE difference in the price drillers can get for their gas. When more pipelines get built to haul gas out of an over-saturated/producing area, like the Marcellus/Utica, the higher the price drillers can get for their gas. It’s simple Economics 101. Right now we have too much supply and not enough demand. When pipelines start flowing our gas to other markets, it the over-supply goes to places where there’s not enough supply and prices go up. This is not just theory. It’s fact. Our favorite government agency, the U.S. Energy Information Administration, has done an analysis of the price fetched for Marcellus/Utica gas for the first seven months of 2017 versus the same period in 2016. Extra/new pipeline capacity has come online in the first half of 2017. The EIA found that in the first seven months of 2016, our gas averaged a sale price of $0.76 below the benchmark Henry Hub price. In the first seven months of 2017, our gas averaged a sale price of $0.53 below the Henry Hub. The gap is narrowing year over year. That 53 cent price is a 30% improvement over last year. So yes, pipelines make a HUGE difference in the price of natural gas!…